Following the larger than expected cut in the Fed Funds
rate, the market quickly surged to its heaviest short term
overbought in a good several years, as the SP 500 rose to
about 4.5% above its 25 day m/a. That kind of early overbought
is normally a bullish development. Yet, the market has been
exhibiting a deep staccato uptrend since the mid - August
low, and it could be that such a pattern may continue for
a while. From a strictly technical point of view, the short term
trend is up, and a few of the intermediate trend indicators
have turned positive as well. A round of profit taking in the
wake of last week's big overbought would hardly be an unnatural
development. I would happily concede we could see some more
jittery selling pressure, but the market favors the long side
of the trade until we see some technical damage.
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