Friday, June 13, 2008

What the Hell is the S&P Proprietary Oscillator?

I hate when Jim Cramer busts out some obscure indicator and then doesn't tell you where you can check it. It does seem to have quite a rep according to him:

Historically, over a 20-year period, Cramer said the oscillator has never let him down. It has certain periods when its readings are really high. That is when market players should sell, he explained. Then there are certain periods when the oscillator is really low, very negative, and that's when people have to buy.

Upon researching it I come to the conclusion that it is like the Colonel's Seven Herbs and Spices or the Secret formula for Coke or something. In fact it sounds like the kind of thing that is locked in a vault somewhere in New York behind dobermans and stone-faced guards carrying AR-15s.
I scoured the S&P site and it doesn't say anything about it in their products section.

I also read rumors that the thing costs like $1000 a year to check. Maybe you need to be a Bilderberg as well? However this site claims to have a formula for it but I'm not sure if this is the same thing as what the S&P uses.

((High - Open) + (Close - Low)) / (2 * (High - Low))

In any case the thing is at -6 according to Cramer this past Friday (6/13.) That means there should be a snap back in stocks next week as it goes back to normal. Hmm, it should be interesting to see if there is a big rally next week and what event sets it off. My guess is on a quick drop in oil prices to the $120 level. But that is just a feeling I get from all the jawboning going on by OPEC, IEA, Paulson, whomever. There are just too many big players that want to see it drop for it to go to $150 before going back to $120.


Anonymous said...

according to the formula given by the website that claims to know the formula, the oscillator for june 13 would be 72%, which according to the website is "unsustainable buying pressure". the s&p opened at its low for the day and closed at its exact high for the day.

Anonymous said...

From S&P link:,5,13,0,0,0,0,0,0,0,0,0,0,0,0,0.html

Oscillator (S&P Short-Range Oscillator)
The S&P Short-Range Oscillator (Oscillator), used by both institutional and retail investors alike, is a market measure tool that generally aims to determine whether the U.S. domestic equity market has been oversold or overbought.
The Oscillator takes a number of related variables of trading data into account, tracks development according to several moving averages, and results in an average numeric value which may be either positive or negative. Historically, the expression of this result has been viewed as symbolic of the condition of the market.

An Oscillator value of 50% is considered “par.” When the Oscillator reaches a value of “+4%” (meaning 4% above par, or 54%), the market is technically said to be in an “overbought” position. Markets in this standing may be considered as being poised for a downward correction.

By contrast, Oscillator values falling to levels below 50% may be indicative of a trend in the opposite direction. An Oscillator value reaching “-4%” (meaning 4% below par, or 46%) is a technical indication of an “oversold” market, which may set the stage for a rally.

Extreme oversold or overbought market positions, meaning a situation in which Oscillator values reach -8% or +8% respectively, can often signify impending significant market advances or declines.

The Short Range Oscillator is provided through the “Trendline Daily Action Stock Charts” publication. Annual subscriptions are available with issues mailed weekly, biweekly or monthly.

2008 Annual Prices

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Joemama said...

Cool thanks for the info from the S&Ps site. So my $1000 a year price was about $345 short. Man S&P sure makes a killing from selling their info.