A diary of the thought process behind my investment decisions
Oversold In Pictures
For the first time since early July the market is oversold as you can see in the chart below.
Here is a look at the raw data that makes up this indicator below. As you can see for the next four days we will be dropping negative numbers which I highlighted in red. That is the reason I am looking for the market to rally through the end of the week.
Sentiment is mostly negative as surveys, Rydex data and the sudden awakening of Wall Street analysts to a second half slowdown all point to a gloomy investment community. My only reservation is that the put/call ratio showed a little too much enthusiasm yesterday. But with the oversold reading and the majority of evidence pointing to negative sentiment, I believe a buy on the bad housing data will yield a profit by the end of the week.