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Lights, camera, action!


I am going to do a column on this later, but wanted to pass along some very quick thoughts on the tape. With 80% of OEX components in deeply oversold condition, it is clear that the market is heading for another intermediate-term low. Here is what I would look for as a sign that it is imminent:

NYSE New lows: 600-700 - currently 71
10-day NYSE TRIN: 1.60 or above - currently 1.50
NYSE 10-day net Breadth: -700 or worse - currently -465
Weekly SPX fast Stoch: 10 or below - currently 23
Weekly SPX MACD: -55 or worse - currently -18
Weekly RSI: 25 or below - currently 41
% SPX below 200-day MA: -15% or worse - currently -8.4%
VIX Index: 50 or above - currently 35

The bottom line is that the high percentage of oversold components in OEX suggests that the market is in process of washing itself out, but that it takes more time than one expects as the intermediate-term indicators need to catch up to the near-term ones. The last time the near-term oversold readings broke 80% was last September 25th. Look at the action from that point until the low in Oct.
Here I come Rhonda, you better get that make-up ready!
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