That was some bounce in the Q’s, huh? Yeah.
Meanwhile, the RSI’s on the 60min charts of SPY, DIA, IWM, and Q’s dipped well into oversold territory and then the computers kicked in on the last two candles on a salvage operation. Because I always expect the markets to bounce when the RSI’s drop below 30 on the 60min charts, which they did for the ETF’s above, then I have to expect a bounce tomorrow, whether or not a bounce actually materializes or not. It just depends on what kind of news drives the market tomorrow and the day after that, etc.
The market went into extreme oversold status, again. This has happened so many times since May that I’ve lost count. Regardless of the number, this is not anywhere near normal, not even 2008 normal, if there is such a thing. Prior to the recent decline, when the markets would enter extreme oversold territory you could expect residual selling early in the following session and then a rally of one degree or another. But in this new normal, it’s really anybody’s guess.
Here are the numbers:
$NYUPV dropped to 62.65, which is oversold.
$NYADV dropped to 447, which is oversold.
$NYAD, the daily, went to -2160, which is oversold.
$NYUD:$NYUPV went to -12.84, which is oversold.
$NYMO pushed through the lower Bollinger Band, so this is also showing oversold.
$NYSI dropped by 73.14 ticks today, oversold.
$TRIN closed at 2.61 indicating panic selling at the close.
Zweig Breadth Thrust dropped to 39.64, oversold.
4wk New High/Low Ratio dropped to 7.03. This was already hitting oversold regions last Thursday and Friday and now is even more so.
92% of volume went into declining issues, oversold.
All of the above says that market participants should expect a bounce starting sometime tomorrow, especially since we’ve had two 90% down days in the last three sessions. But it might not be so easy and even if we do get bounce tomorrow this doesn’t mean that longs can finally breathe a sigh of relief.
IMHO this is no time to try and play the hero by catching a falling knife.