Stocks dive 7 straight sessions
Its been rough this last week in trading stocks or equities. For seven straight sessions the market has gone down. SPX has plunged from 1260 to 1158 just about 100 points in a week. That is an extreme and shakes up weak hands, people give up and sell and take a loss. But what it does it creates extreme oversold conditions and than the market rallies and rallies hard. The McClellan Oscillator is now at 300 reading with a hook to the upside. I am not going to say it cannot go down further but its highly unlikely. When these readings occur usually a rally breakouts to the upside. That is what it has done if you examine the chart for August 8 2011.
This has been a rough few months because the market is caught in a range and it rarely finds any impetus to go higher when the European debt crisis has been hounding it for days. First it was Greece than it was Italy and now its just Europe in general. Than the Super committee failed this week adding to the bad news. Over the Holidays depressing news is lot more in store than good news and this headline driven market has taken a plunge. But sooner a rally appears on the horizon because of the oversold conditions and that is where lots of trading is done to make money.
We have been sitting on the sidelines during this last 14 days abiding our time. We have no losses on the books yet. Soon the market rally comes around we take advantage of the upside move. So keep the powder dry, there will be loot of shooting of the turkeys. Yeah the turkeys who have pushed the market down when major players were out on vacation basking in sun and there was nothing better to do in the low level cubicle.
Want to see how this is done?