Have the Bulls given up?

Extremely oversold, again! The large reversals that we have seen over the past few days (especially after large directional moves) usually precede a low. Couple this with the “very oversold” condition of the market and with a bullish seasonal picture ahead (Memorial Day) and things start to look a little brighter for the bulls, at least for the short-term. SPY is now officially below its 200-day moving average for the first time since last October. The last four times the 200-day was breached it led to a bouce that eventually broguht the index higher over the coming months. Hopefully, we get a similar reaction this time around.

RSI Wilder (5) for May 23, 2006

• SPY – 17.9 (very oversold)
• DIA – 13.2 (very oversold)
• IWM – 15.2 (very oversold)
• QQQQ – 14.1 (very oversold)