Where’s the bounce?
May 18, 2006 · Print This Article
Our indicators have kept us out of any long trades and we are thrilled about it. Normally, we trade once or twice a month in our ETF, but we haven’t had a trade in well over a month. As I mentioned last week, given the extremely oversold nature of the market a trade is imminent. At these extremes our indicators are moving ever closer to a signal. SPY is quickly approaching its 200-day moving average and given the “very oversold” condition and the nature of the decline, we should see some strong support at this level. SPY’s 200 day MA is 125.87, so keep a close eye on this level and how the market reacts if it is reached. The techical indicators are certainly pointing towards a short-term bounce. Bollinger bands have been breached for days, put/call ratios are at extremes,etc and all of the major indices are in very oversold territory. The list keeps piling up day by day as is becoming exhausted at this point. Tomorrow’s option expiration should be interesting to say the least.
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RSI Wilder (5) for May 18, 2006
- SPY – 11.3 (very oversold)
- DIA – 18.0 (very oversold)
- QQQQ – 6.8 (very oversold)
- IWM – 10.0 (very oversold)
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