It appears that the market will reach its maximum oversold reading today. I did not think we would reach it because seasonality is strong but I was clearly wrong.
What does this mean going forward? If we get a nice washout today it should be difficult for the market to make much further downside progress in the short term and the bulls will get a chance to make a run higher. The bulls can waste the reading but that would take a few days.
China started a worldwide tumble lower last night and it is being blamed on bad economic numbers. I believe the $20 billion IPO of a Chinese state owned bank is the more likely culprit, as liquidity is drained from other stocks to buy that one.