I noted yesterday that the markets were so oversold that I thought they might bounce. At Monday’s close, 59% of the Nasdaq 100 stocks were oversold. By Tuesday’s close this percentage fell to 39%. Now that the rebound has begun, the question is how far it will go. No one knows. During the most recent market bounce, the percentage of oversold stocks fell to zero. I will watch closely to see whether this market tops out soon or develops into a sustained major up-trend.
Month: December 2011
5th day of QQQ short term down-trend
The long and short term market trends are down. I remain mainly in cash in my trading accounts. Many of the stocks I follow are very oversold, suggesting that we could get a bounce.
GMI is at 1 (of 6), GMI-2 is at 0 (of 6); QQQ and SPY in Stage 4 declines?
Friday was the 4th day of the current QQQ short term down-trend.
Only 29% of the Nasdaq 100 stocks closed with their MACD above its signal line and both the SPY and QQQ have closed below their critical 10 week averages. I am in cash in my trading accounts and will start moving out of mutual funds and into money market funds in my university pension. The longer term averages appear to be continuing Stage 4 declines. The weekly chart of the SPY (S&P 500 ETF) shows it to be back below a declining 30 week average (red line). This is a very ominous pattern. The QQQ has a similar bearish pattern.
