Wednesday, March 26, 2014

Short term oversold that's setting up a strong short term rally but may need one more day of scary sell-off

From the last post I stated a short term overbought should last a few more weeks before running into a pause or consolidation. We got that in early March where individual stocks, especially speculative momentum stocks, started to sell-off. I followed up with a comment to the last post of a possible brief rally of the stock market with the SP500 rallying back toward the 1870-1880 level. Was unsure whether the SP500 would continue higher from there or would come back down. Well, from the past week the Nasdaq, Nasdaq 100, and Russell 2000 had sold off quite a bit. The other major indexes... Dow, SP500, and NY Composite had held up better. With the weakness from the last three weeks the stock market is now at short term oversold levels though not at medium term oversold yet. But I still see the stock market could drop a bit more before turning higher again. If there is further brief weakness than I'm looking at the SP500 1830-1835 level to eventually see a short term rally to develop that could eventually lead to a break above 1880 and higher. Looking ahead that could get the investors excited as the SP500 finally rallies toward 1900+ after having failed to hold at 1880 this month, March. But a rally above 1900+ could be short term lived as the SP500 and stock market should make likely break back lower with a sharp quick sell-off to eventually retouched its 200 day moving average, which by then should be moving slowly higher toward the 1800+ level.


1 comment:

  1. Since this post, the SP500 came 1/2 percent close toward the 1835 level I was looking for. It bottomed at 1842 and rallied to as high as 1897 this moring but turned down since during intraday and looks like the market is going to start a huge quick plunge down. So looks like a move down toward the SP500 200 day moving average which is +7 percent lower around the 1755+ level.

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