A-D Line, McClellan Oscillator, & Summation Index June 6, 2014

    The A-D line posted two consecutive very strong days: +1731 on June 5 and +1473 on June 6. This resulted in the McClellan Oscillator rising to 35.72  with the Summation Index breaking above it’s high-level base when it cleared 850 and with it now moving up towards it’s early March high of 1050. The SI has moved up in a series of fits and starts but has created a definite uptrend. We'll see if it has enough power in it to reach the March high without making a short term correction first.         
    In the meantime we can look at the relative strength chart of the $RUT vs. $SPX.  Here is a link to the chart of $RUT : $SPX for June 9: 

http://stockcharts.com/freecharts/gallery.html?%24RUT%3A%24SPX

   It has broken above it’s downtrend line and might come down to back test it on any correction. I am thinking the RS ratio would have to move higher before it did fall back to the downtrend line, however. I am not a paying member of Stockcharts so I cannot draw in a trendline. You’ll have to use a soft straight edge on your monitor screen. That means the $RUT price would be about .5950 to .5930 x whatever the $SPX is at the time it touched it’s downtrend line from above.

   To have forecasting value, you would have to estimate what the $SPX might be when the RS ratio hit the .5950 – .5930 range (I am talking about a short-term correction here). But that would be an easier task than estimating the more volatile $RUT price. The $SPX closed at 1928 on the day it broke above the down trend line. By watching the $SPX as the RS retraces to the downtrendline (say at .5940), we might estimate to within a couple of points where the $SPX would touch it, and using the RS ratio value, calculate where that would be for the $RUT.

Using the above method and guessing that the $SPX would be around 1924 when the RS approached it's previous down trend line from above, the $RUT value would be about .5940 * 1924 = 1142.86.