US markets deeply oversold, ready to bounce YES!

 US markets have gone through serious pullback after making a new all time highs in most indices in the month of September, but in total 13 trading days most had sharpest pullback which we have seen , here is the tabulation of last 13 days .

Nasdaq    Down11.87%

SOX        Down 10.44%

S&P 500 Down 8.24% 

DOW      Down 5.86%

IF you factor 13 days of trading, one can see the ferocity of this pullback.

IF we look @ RSI, most are deep in oversold area as listed below :

XLE          39.91

Nasdaq    42.09

S&P 500  42.74

SOX        46.78

DOW      46.90

IWM       50.09

GLD       51.87

JETS     55.15

TAN      57.52

Seeing Nasdaq @ 42.09 is a real surprise.

I do have some positive numbers also and it is in above 50 DMA category :

DJIA

IWM

TAN

GLD

There are 2 positive which is worth noting Russell 2000 & DOW both are contrary indicator of this selling.

TAN has been the strongest sector, which has surprised many and me.

IF you further look @ carnage AAPL has lost 22% which is in bear market which kicks in @ 20% pullback.

OK.....any further positive news...YES....

Vaccine for COVID-19 is making much faster progress than anticipated.

TIK TOK has been approved for Oracle partnership with Walmart joining with Bytedance.

TIK TOK news may pull us out of this 13 day trading slump....

Which sector will outperform in this leg up is a very challenging question, IF vaccine gets more positive press then all laggards will move UP sharply.

IF TIK TOK news is the only catalyst then whole technology stocks will get rerated higher, sentiment will improve which should give lift to overall market.

Based on recent pullback, it is clear that expensive techs are being sold to book profit.

SO.. give your portfolio a second look and analyze why DOW lost the least in this sharp pullback, answer may surprise many.....it is the rotation which is taking hold.

Good luck with your own analysis and comfort level.

BLOG does NOT give buy or sell.

Saleem

Posted in: Mixed