Short Term Bullish, Medium Term Bearish

The market is the most oversold that it has been since the March low (on a short term basis). In the short term that is bullish because a bounce is likely not that far off. In the medium term it is bearish as it shows a change in character. Have a good night.


MarketCynic said...

Totally agree. We are probably going to pop a bit tomorrow but I don't think it will last long. I actually think we'll sell off again on Friday even though its end of month. I think next week will be when we rally but it will probably be from lower levels.

Tsachy Mishal said...

The market will not be maximum oversold until the end of the day Monday. That will be day 10 of the decline.

I think that end of the month could bring forward the rally. Were it not the end of the month I would have waited until Monday to make my buys.

Anonymous said...

What is this maximum and minimum overbought / oversold shenanigans. shenanigans dawg

Tsachy Mishal said...

The market started going down the Tuesday after expiration. Monday would be trading day 10 of the decline.

When a market goes in one direction for ten staright days the move is generally exhausted. Why? I don't know. But it works.

Every rally in the past 3 months stopped dead in its tracks after 10 days of straight up.

Anonymous said...

What about the rally from July 18th till August. In that move, mkt went up 10 days, traded side ways for a few days, and then broke the range and went up for another 7 days. That particular stretch market stopped going up after 10 days, but it didn't really correct.

Trading, which is based on human behavior really has no rhyme or reason sometimes. Actually a lot of the time dawg.

Tsachy Mishal said...

It worked off the overbought reading by going sideways. Thats possible too. But it still stopped going up until the overbought reading was worked off.

Anonymous said...

I remember us having this conversation that those indicators mean nill. IE after being overbought, the stock or market can just stay at that level for a few days, and suddenly, even though the price has gone up drastically by staying, it's suddenly no longer overbought.

Who the heck comes up with these indicators.

What I want to know is, how those eliot wave theory apply to this current chart pattern on the spx.

I see some sort of fractals and waves. Not really knowledgeable about Fibonacci numbers or the perfect square or whatever, but there has to be some kind of pattern that should tell us whether a short term new high can be made or how much we can retrace after this correction approximately.