Where will the consolidation lead?

Will the recent consolidation lead to another test of the recent lows? As I have stated over the past few days, I think so. While the market moved notably higher yesterday it still was unable to move our overbought/oversold significantly higher. Furthermore, our shortest-term overbought/oversold indicators still have plenty of room until the probability for a short-term decline is significant. Until we see another extreme, it is a guessing game in my opinion which is why I would rather stay on the sidelines at this point. This is one of the keys to success for our ETF Extremes strategy.

I apologize for the short posts recently. I am concentrating my efforts on updating the website and the newsletter. I should be back with some interesting additions to the blog next week.

Overbought/Oversold levels for March 7, 2007

• SPY - 39.7 (neutral)
• DIA - 40.0 (neutral)
• IWM - 37.8 (neutral)
• QQQQ - 35.2 (neutral)
• OIH - 62.9 (neutral)
• GLD - 41.9 (neutral)

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