August 17, 2017

In an Oversold State

The large-cap benchmarks are now in an oversold state and I expect to see a bounce over the next few trading days. However, the upcoming FOMC policy statement on Thursday at 2:15 EST could limit any upside attempt. In the recent past, the market has struggled ahead of a Fed announcement, especially after a sharp move occurred. I would expect to see similar price action this time around. Also, remember that the trend established immediately following the announcement is usually reversed within the next few days. So be aware of false breakouts. Ideally, I would like to see the market sell-off hard immediately following the Fed meeting and as a result move into a “very oversold” state. If this occurs a signal in our ETF is all but certain. Our indicators are very close to a signal.

Overbought/Oversold levels for June 26, 2007

  • SPY –  24.3 (oversold)
  • DIA – 26.4 (oversold)
  • IWM – 28.6 (oversold)
  • QQQQ – 33.0 (neutral)
  • GLD – 24.5 (oversold)
  • OIH – 29.7 – (oversold)  

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