Day 5

Today was day 5 of the decline. Unfortunately, we do not get a good oversold reading until a decline is about 10 trading days old. A good oversold reading generally leads to a longer lasting rally.

It is fairly uncommon not to see some sort of relief rally during that 10 day period when the market becomes oversold. Generally, there is a multi day move lower, followed by a brief relief rally, followed by a second multi day move lower.

Thus far we have not seen the relief rally I have been looking for. The main culprit appears to be the liquidations in Chinese companies, financials and select momentum names. I remain of the belief that we should see some sort of a relief rally or at least chop sideways for a couple of more days. Have a good night.

1 comment:

Anonymous said...

After the last 1/2 hour panic selling/shakeout, the afterhours " what did I just do before 4PM " futures buying Id be very surprised and wrong If we did not get the expected snap tomorrow.
Energy and materials are holding. Crude had a good day and I d like to see it tomorrow
above 100. Currencies unlikely to  move up or down sharply upcoming days. Dollar is maintaining
its weakness. Today intraday bears were falling asleep and bulls were caching them off guard
with buyprograms but obviously the Bernanke nonevent jinxed the whole thing. Bernanke was stating the same as before: Inflation threat is secondary to creating good environment for investments/ job growth.  VIX , RVX and VXN is negative today with sellers in them at 4:15.
Volatility patterns are not indicating further decline Good night.