In the 12/6 post on the stock market, it was mentioned that
the anticipated rally had materialized, but that the rocket
like trajectory was simply too strong. It was mentioned that
a sharp sell off was in the offing, as seasoned traders were
not likely to ride the rocket much longer. And so, the
market behaved and delivered a heavy sell off. The market is
mildly oversold in the very short run, and I am intrigued that
my six week selling pressure gauge is once again in significant
oversold territory. That suggests to me that there will be
another try at a rally before the year is out.
At 1445, the SP500 needs to hold around this level in the days
right ahead to put it on a suitable trajectory up from the
Nov. 26 low. Further sharp weakness from here would suggest
another retest of lows down around 1400 -1410. That's the easy
call, but we've had enough of a sell off already to bring in
some buying interest now. So, I'd watch the action carefully
over the next day or two to see whether the bulls are ready or
not.
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