Over the past few weeks I’ve noted that the markets were oversold but still had plenty of room to the downside.
I could repeat that again, but finally the market responded with a steep bounce on Friday.
Before the pre-market on Friday I tweeted that a reversal was highly likely for that day.
It duly came, but that doesn’t mean you should make a habit of bottom fishing.
I should also make a clear distinction …
Pullback reversals in the context of a longer-term uptrend is one thing. What we are experiencing right now is not the same.
Trying to find a low in the context of bearish conditions and when there’s hardly any support around is a fool’s game.
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Current Market Behavior:
The longer term slower market timer – my OVIsi – is settled in the bearish zone
My medium term SPY Swing Timer is negative and still slightly oversold, while the Short Term Timer displayed a green arrow on Tuesday but in the context of a negative OVI which negates the signal.
As always, please do not simply follow the arrow signals blindly.
All the indices still remain below their 200-dmas.
Market Outlook:
Like the last few weeks, we are short term oversold with plenty of scope for more downside. Friday’s bounce has a good chance of following through in the short term before more bearishness resumes.
Stock Selection:
A number of consolidations today, but not many nuggets. As ever, my focus has been to identify tight consolidations with corroborating OVI behavior and near Key Levels. As you’ll see today, there simply aren’t many of those right now.
Application:
This week I have focused my searches on consolidations near the Key Levels.
Software Upgrades
Nothing to report this week, but plenty is going on behind the scenes.
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Remember, you can play the video at 1.25x or 1.5x speed if you want to save time! I have placed all the stocks covered in today’s review in your “Latest Preview” watch list.