RASI Stalled at the +500 Level

The NYSE's McClellan A-D Oscillator has been below zero since May 11, and so that means the companion McClellan Summation Index has been falling.  The context of how this is happening has an important message for what is next in the stock market.

This week's chart shows the Ratio-Adjusted Summation Index (RASI), which differs slightly from the classic version my parents created in 1969.  The RASI is calculated the same way, but using Advance-Decline (A-D) data that has been adjusted to factor out the changes in the number of issues traded over time.  See https://www.mcoscillator.com/learning_center/kb/market_data/ratio_adjusted_summation_index/ to learn more about that adjustment.

Adjusting the data this way makes for more useful long term comparisons.  And it allows us a special way to look at the strength of a new rally.  This involves the +500 level.

The RASI was above the +500 level at the beginning of 2026, which said that the market was strong and the bulls were in charge.  The market can still see a correction from that condition, but most of the time there will be a renewed advance.  We have seen that renewed advance after the ugly month of March 2026, when everyone was worried about the outcome of war with Iran.  That corrective period took the RASI down as low as -323, which is a very ordinary sort of level to see on a normal corrective pullback.

It is on the next rebound where the +500 level of the RASI comes into play again.  And on this latest attempt, the RASI stalled out at +470.  A failure at or around the +500 level says that the rally does not have enough "escape velocity" to keep the uptrend going, and it opens the door for a more meaningful pullback. 

I need to clarify that the +500 level is not a precise threshold for this usage.  It is not like +499 is bad and +501 is great.  It does not work that way.  There have been RASI +500 failures which did see the RASI go just barely above +500.  So readers need to not apply this interpretive criterion too strictly.  The higher that the RASI can climb up above +500, the more confident one can be in the message that there is more coming. 

I should also note that big exogenous events like Covid in 2020 can ruin a perfectly good bullish indication.  There were also a couple of instances in 2022 and 2023 when the RASI rose up above +500 and the rallies fizzled.  Nothing is perfect.

The point to take from seeing the RASI apparently failing now just below +500 is that the breadth data are telling us the rally is fizzling.  The market could change its mind, or it could become a more serious pullback.  For now we should take the message of warning that there is trouble, and it is appearing just as the market is supposed to be transitioning into the bearish period of annual seasonality lasting from May to October.