Game of Trades: The Only Time THIS Happened Was in 1987
Investors and traders alike rely on market signals. While no signal is perfect when trading, rarely-occurring signals with a high level of accuracy are worth watching.
One of the most followed signals is the yield curve. It is currently inverted. Typically, that’s a sign of economic stress. When the yield curve comes out its inversion, it has historically been a sign that a recession underway.
Today, a similar market warning signal has come out. It’s based on the Maclellan Oscillator. It’s recently soared to a reading of 50, last seen in April 2023 and October 2022.
The positive sign on the oscillator indicates that the market breadth continues to rise. In other words, more and more stocks are going along with the current rally.
Market sentiment indicates that investors have gone from being overly pessimistic to overly optimistic. That’s a sign markets will continue higher for the next 60 days.
However, several times this signal has indicated a short-term rally before a big drop lower. That includes the one-day market drop in 1987.
If this signal holds, stocks have a strong chance of rallying as much as 10% in the next 60 days. After that, there could be a sharp, sudden pullback. For now, this signal remains bullish.