Chapter 1: A Personal Journey Through Market Turbulence

In 1987, after experiencing a devastating loss of my family's life savings during the market crash, I found myself watching the program "Charting the Market," hosted by Gene Morgan on Channel 22 in Los Angeles. At the time, I was in a state of shock, grappling with the relentless decline of the market that had persisted since October.

Mr. Morgan had mentioned during the crash that for those acquainted with the McClellan Oscillator, the downturn was anticipated. He illustrated this by showcasing divergences on the NYSI, the Summation Index, which serves as a long-term breadth indicator of the Oscillator, leading up to the catastrophic October events. This was the moment I began to pay closer attention to his insights, although he hadn’t emphasized it until that particular day. His analysis of the NYMO, the short-term component, and the NYSI was simply one of many indicators he presented.

As I sat there, still recovering from the emotional scars of the crash, I was only passively engaged, uncertain about the significance of the McClellan Oscillator.

It was now December 4th, 1987, a Friday, and the New York Stock Exchange was witnessing new lows, surpassing those of October, even as the Dow held steady. Notably, the McClellan Oscillator was also showing resilience. That day, Mr. Morgan observed a significant divergence in the NYMO, suggesting to the audience that we might be witnessing a "McClellan buy spike," but we would need to wait until Monday for confirmation.

On Monday, the market, which had been in a freefall, surged back to life. "Yes," Mr. Morgan announced, "that is indeed a McClellan buy spike." The following day, the market continued its ascent, and by Wednesday, it was soaring even higher. Mr. Morgan, instead of placing the Oscillator among other indicators, prominently featured it at the forefront of his analysis.

"Isn't it marvelous," he exclaimed with enthusiasm, "to once again experience the undeniable accuracy of the McClellan Oscillator?" This moment reignited my passion for market analysis, and since then, I have remained actively engaged in the world of trading.

Chapter 2: The Oscillator's Relevance in Today's Market

Today brought back memories of that pivotal time when the NYMO/NYSI first captured my attention. With NVDA announcing impressive earnings and promising future prospects, the entire market reacted positively at the open. However, the NYSI, which had indicated a downturn yesterday, swiftly took control and dragged the market down.

From my Nifty50StockList, only one out of four stocks managed to rise after the opening bell. The SPY534PUT yielded a remarkable 300% profit through a simple options day trade, while the QQQ461PUT generated a 200% return. Notably, among the major stocks, an AMD put returned 400%, and a MSFT put achieved 226%, with both META and TSLA puts surpassing the 100% profit mark.

However, Boeing (BA) stood out as a prime example of the NYSI's predictive power, managing a modest 3.3% increase despite negative news and criticism. For those familiar with the McClellan Oscillator, the decline of BA was not unexpected when the NYSI turned down right at the market's opening. The stock faced a sharp drop, as illustrated in the daily chart below, where green represents a rising NYSI and red indicates a falling NYSI. Generally, the market and its stocks tend to rise with the green and slide down with the red.

The BA 185PUT, triggered at the open, yielded an impressive 800% gain. "Isn't it wonderful to once again witness the absolute infallibility of the McClellan Oscillator?" Mr. Morgan remarked 37 years ago, a sentiment that resonates just as strongly today.