Market was weak as anticipated and now another ST oversold signal.

From last post there was a short term oversold buy signal and I cautioned that this time due to weakness in the stock market in general compared to the indexes (what is called negative divergence) I anticipated further weakness to the downside whether or not the stock market rallied. Right now most of the major indexes along with stock market gave back all and more of the brief rally that occurred last week. Only the SP500 and the Dow had held up better. Which now leads us to another short term oversold signal and again I do not anticipate much more than a week or so of upside. But looking at the medium term signals they are now getting close to between 'neutral' and 'buy'. The stock market could rally off this medium term signal or could continue to pause and struggle for a few weeks to reach a lower level to generate a medium term oversold buy signal. For now continue to use caution or just stay out for the time being.

At short term oversold but will the market bounce again this time?

From the last post there was a short term sell signal but looking at the major indexes of the Dow, SP500, Nasdaq, and Russell 2000 since there seems to be more of a pause then a correction. Only the Russell 2000 started to suffered a sell off this week. While the major indexes had looked calmed, individual stocks have underperformed the stocks in the indexes. This is what technicians call negative divergence where the underlying stock market is weaker than the major indexes. From Wednesday's correction, a short term buy signal came close to being activated but backed off a bit from today's, Thursday light rally recovery. The last two times where a short term buy signal was activated or close to being activated were at the last week of December 2012 and in late February 2013. The stock market rallied off nicely after those two time periods. So will the 3rd time be a charm again? Due to a lot of negative divergences that have accumulated in the past month I would be caution that this week's weakness could lead to more downside for the short term despite an oversold signal being given off on Wednesday (or trade the bounce rally as quick short term plays and with minimum amount of capital.) From the chart illustrated I would look for buying support at the SP500 1530 area.