I still insist the general market is oversold and is due to go up. Here’s a chart showing what happened every time oscillators I use got to these oversold levels. Every time the market was higher. The duration of the upswing varied, but there was an upswing nonetheless.
Warning, it’s not a huge sample (1 year, 3 months) but good enough for my purpose.
These are pretty self-explanatory. I believe S&P 500 has bottomed - clearly oversold on the daily. Weekly chart looks good, too.
As for the patterns, look at the daily – early May to present. Looks like an inverse Head-and-Shoulders. Another point in the bullish camp.
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Ok, so the good news — looks like the market is correcting fairly quickly.
(Reminder: quick ‘vicious’ sell-offs are a mark of the bull markets.)
Clearly, SPX is now at support. Even if this is not the bottom, it’s not that far off. 1,108 on SPX would be severely oversold and a good buy. That number is the 34ema on a weekly chart.
Yep, not even talking about the macro “news” events. Downgrades and such are not the reason for the sell-off (in my very humble ohpihnion). The market was overbought and many are using this opportunity to unload. Was it news to anyone that Southern Europe is in trouble? No.
A little upset at myself for pulling the trigger on LYG way too early. I thought there was a 50/50 chance it would either break out on some good news or correct with the rest of the market. I knowingly took a chance. The news was indeed good – they’re back to being profitable (!) already, about a year ahead of schedule.
And a bit of a diversion.
“Did you know…”
Zofka, “Pearlsong”
“Perspective is the most important thing to have in life”.
If you think the market is overbought and want to short it, check out this chart. Of course, I’m not saying it’ll happen the same way again, but SPX went up 250 points last year while all the oscillators screamed “overbought” and MACD was diverging. All corrections were fairly mild.
In a word, the trend is still up. However, I’m not adding any longs.
Current positions: long SPY, long LYG. Have 12 stocks on the watch list, will highlight them some time this week.
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A bear flag on S&P index. Frankly I expected something like a June bottom, but it doesn’t look like that so far. Maybe it will move up after a quick retest?
I haven’t sold anything yet, still holding March SPY puts, April SPY calls and some now-penny-stockish t*rds BEE and LYG.
Click to enlarge
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