For weeks now, schooled technicians have known the market was
overbought. A correction or consolidation was thus widely
anticipated. Well, we have a correction which has quickly wiped
out the short term overbought and brought the market into a
mildly oversold condition with the SP 500 at 1166.
A bit more weakness over the next several days would lend
confirmation to the downtrend in place as the 10 and 25 day m/a's
would both be down and a longer term trendline pegged off the
3/09 and 2/10 lows would likely be broken.
So there is trendline support around 1160 on the SP 500 and there
is obvious support at 1150. A more attractive and deeper oversold
would develop down in the 1125 - 1135 range.
The abatement of selling pressure today lends hope to the idea the
market could stabilize for a spell in the days ahead, but that is a
From a trading perspective, I would prefer to see further weakness
down to the 1125 - 1135 range before dropping the shorting
mentality and looking long again.
SP 500 chart.
- Peter Richardson
- Retired chief investment officer and former NYSE firm partner with 50 plus years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!