Well, as it turns out, the SP500 could not hold nicely above
my Market Tracker, as discussed yesterday. Today's close of
1304, brings the "500" much closer to the 1280 - 1300 range of
the Tracker.
As discussed this past Friday, the week's end sell off set up
the bears for control this week. They got the upper hand today,
a move signaled by the poor action of the financials throughout.
An oversold condition is developing, and my selling pressure
gauge is rising quickly. Further weakness in the market over
the next 5-7 trading days would produce a deep and tradable
oversold on this important measure.
The new 2008 closing low on the SP500 will have a number of
technicians speculating about a decline to the important low
test zone of 1260 - 1270. I sure cannot discount the
possibility of another breakaway move. It would be scary
but would also spell opportunity.
My proxy for the "average stock" is the unweighted Value Line
Arithmetic index of 1700+ issues ($VLE). This index did not
make a new yearly low today and is trading above long term
support going back to last spring. It may only be that the
index is less heavily freighted by the financials than the
SP500, but it's better realtive performance is worth noting.
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