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
hope only.
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.
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