Did the McClellan Oscillator Just Give a Major Bullish Signal?

On March 3, the McClellan A-D Oscillator hit a reading of 332, which was its highest reading since the 386 reading seen on Jan. 6, 2009. The cause of that high reading has been a big surge in positive breadth days for the NYSE ever since the Feb. 11, 2016 price low. The meaning of it, however, is an open point for discussion.
During uptrends, a really high McClellan Oscillator reading means that there is a surge of liquidity, and it promises higher price highs on the ensuing move. Usually, we look to a level of 150 or above on the normal McClellan Oscillator, or 50 and higher for the Ratio-Adjusted McClellan Oscillator (RAMO) shown in the chart above. The RAMO factors out the changing numbers of issues traded, which can affect the amplitudes of the normal McClellan Oscillator, and thus the RAMO is better for making long-term comparisons.
In a bear market, however, it is possible to see a really robust counter trend rally that produces a high McClellan Oscillator reading, and which does not carry the same meaning as when we see a high reading in an uptrend. So to make a proper interpretation of this most recent high Oscillator reading, we need first to understand whether we are in a bull market or a bear market.

This post was published at FinancialSense on 03/11/2016.