Monday, January 27, 2014
At short term oversold. Rally here as happened last several times or it's a plunge toward the 200 DMA?
Writing this new post while the stock market is still in session and down intra-day. Just wanted to note that I'm getting short term oversold readings from my indicators. The last three times this happened the stock market in the next day or so bounced back for a rally that lasted about three or four weeks before stalling. In recent posts, I did anticipate a quick strong sell-off to occur
around January or February. This looks like what I was anticipating. The SP500 is now down over +4% below its all-time high of 1850 set seven days ago and about +4% above its 200 DMA. So will the SP500 continue to plunge down toward the 200 day moving average (at the 1700 level) I been worried about for the last few months? It could happen but I'm betting for a bounce in the next few days for another strong rally higher.
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To follow up on this post, the SP500 along with the other major indexes have sold off about 2% since. Now the SP500 is 2% above the 200 DMA while the Dow is the only major index to finally touch its 200 DMA after 14 months. Will there be another 2% drop for the SP500? Maybe, but if the stock market could bounce off and rally high from here today Tuesday then there's good chance Monday could be the low or lower range for the rest of 2014. This current week long weakness now have my indicators reading at medium term oversold... not seen since late August of last year. So I'm looking for eventual a higher stock market prices in the coming weeks if not months. --- JimmyC
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