The US markets managed to reverse todays intraday losses and close on a positive note. While market breadth was negative with decliners outpacing advancing issues 2253 to 1584 it appears that the McClellan Oscillator has successfully completed a retest of last weeks low. Even though the last two trading days were fairly ugly from a price loss perspective, the 10% Index remained above the -500 warning threshold. While it's still possible for the markets to breakdown from here it does not appear that this will be the case as long as the 10% Index stays above the -500 level.
Todays MCO change was minimal at just +5.95. A small MCO change often proceeds a sharp move in the market within a few days. I expect a big rally Monday or Tuesday.
The McClellan Oscillator for Friday 2/5/10 Click to enlarge