The bears finally made an appearance. How long will they stay?

September 21, 2006 · Print This Article

The market moved sharply lower today. The bearish indicators that I have mentioned over the past week were just too much for the bulls to overcome. An “overbought” market, weak seasonality, historically low VIX, strong overhead resistance…, the list goes on and on.

The major indices have moved back into a neutral state and I still think there is room to continue the move lower over the short-term. There are quite a few bearish factors out there that can’t be ignored. The Nasdaq 100 is still hovering around the overbought territory so I think this particular indice will lead the charge lower. The next few days should give us a better idea if todays move will be sustained. We are back in the trading range that was established on 9/13. Typically, the longer the market trades in a short-term range the larger the move once the market exits the range. So, be nimble and always use appropriate money management techniques (capital preservation) if you happen to get caught on the wrong side.

Articles of Interest

RSI Wilder (5) for September 21, 2006