How Oversold Are We?
Once in a while you get shown the light
- The advance/decline line has been negative in 10 of the last 11 sessions.
- The S&P oscillator hit -9.4, the most oversold reading since July 2002, which was a major low in the mkt (even as it was undercut in October 2002)
- Jeff Saut tracks what he calls "selling stampedes", and said that this stampede has gone on for 30 days, an extremely rare occurrence
- The % of stocks on the NYSE trading above their 50-day averages is back at levels seen at the March '08 lows (see graph below)
So the conditions are setup for a nice oversold rally. To my critics, I never said I would be able to perfectly call the exact day the market would bottom. What I did say was that I wanted to use further upcoming weakness to add long exposure to the market, since historically these oversold readings have proven to be good trading opportunities.
Have a good night--