Back To Thursday’s Low

The market is back to “very oversold” levels and many of our measures are reaching extremes. You know what that means. Yes, a signal looks imminent although we have said that before to no avail. The market is in the same condition it was a month ago right before the two key inflationary reports (PPI and CPI) were due to report. Last month, the market tanked and moved deeper into oversold levels not seen in years. Could it happen again? People were calling the bottom for days and many market participants paid dearly. Fortunately, our we were able to avoid such a catastrophe as our key options trading indicators kept us on the sidelines.

The PPI is due out tomorrow and should give us a decent indication where we might be headed over the short-term. Last month the market responded favorbly to the numbers, however, the bullishness did not last as the market sold-off and finished lower on the day. The following day the CPI disappointed and the market moved sharply lower.

Given the current state of the market, the next few days could be extremely important for the market. More and more bullish indicators are showing up so a short-term reversal seems likely. But, as we all know, nothing is certain when it comes to Mr. Market.

Daily Articles of Interest

• : Did He Call a Top in Oil?

• : Three Times this Week

• Cases Have New Twists

 RSI (5) for June 12, 2006

• SPY – 20.1 (oversold)
• DIA – 15.7 (very oversold)
• QQQQ – 15.9 (very oversold)
• IWM – 17.6 (very oversold)