Online Stock Trading | Extreme Oversold Conditions Set Stocks for a Massive Rebound

Extreme Oversold Conditions Set Stocks for a Massive Rebound


Filed Under Market Commentary |

For much of the trading session on Tuesday it was a volitile day where stocks couldn’t decide whether the downside or upside was the place to be.  It wasn’t until late in the session where shorts started to cover sparking a late day short covering rally.  Volume was tracking higher all day long and finished higher on the day.  Helping stocks surge was the huge price drop in crude oil prices.  Tuesday marked the 2nd day of an attempted rally and we’ll need to see continued upward movement with volume favoring the long side, heavily!

Once again New Lows (NL) outpaced New Highs (NH) by a large margin; 27 to 1.  In addition, VIX and VXN failed to reach new highs as stocks pushed to new lows.  Ideally, you would see NH outpace NL and VIX and VXN hitting new highs as stocks hit lows.  Unfortunately we have not seen enough fear in the market to warrant a true market bottom.  Like March, VIX and VXN didn’t hit new highs as stock hit lows signaling the rally forming wouldn’t last.  The same will go with this rally attempt even if it follows through.

Time frames in this market must be real short, longer term positions aren’t just there yet.

Enjoy

Market Speculator

No Positions 

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Comments

4 Responses to “Extreme Oversold Conditions Set Stocks for a Massive Rebound”

  1. DAS kAPITAL on July 10th, 2008 1:31 am

    Whoa! Flying into the sun with wax wings aren’t you, Market-Speculator? This news-type announcement only underscores desperate hoping against hope. Even the Hindenburg Omen has occured twice in June. Woe to the blind leading the blind!
    Wall Street has been way too unregulated for almost a decade. All sorts of bizarre financial instruments have evolved since the reversal of Glass-Seagall and the invention of commodity based securities, the most notorious of which fathered the subprime housing crisis. These evolutionary freaks are susceptible to immediate extinction and Wall Street as we know it.
    Speculate that.

  2. Market Speculator on July 10th, 2008 6:01 am

    DAS

    I guess you just read headlines…if you read through the headline and actual absorb what I have been saying is that I don’t believe we have bottomed. I myself sit in 80% cash right now.

    We aren’t close to a new bull market and whatever happens between now and then is anybody’s guess…it appears yours is that we have a complete financial meltdown…

    Enjoy the End of Days Kool-Aid.

  3. Gio on July 10th, 2008 6:25 am

    Hey MS… I sure hope we don’t have a financial meltdown! But I kind of agree with Das in that I don’t think our markets don’t trade that efficient anymore… either that, or we just have many new instruments that the overall market needs to adjust to.

    Anyway, good work as always. Keep up the specking..

    -Gio-

  4. Market Speculator on July 10th, 2008 7:03 am

    Gio -

    THEY HAVE NEVER BEEN EFFCIENT! That is Wall Street noise at its best. Academia/Wall Street noise developed that “theory” as a way to rationalize something Academia and the common man could not understand. As long as human nature is involved, the markets will never be efficient.

    Human Nature never changes, only the market participants do.

    I can only suspect that the number of instruments will “correct” itself and we’ll move forward as usual.

    Thanks for stopping by!
    Aloha Bro

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