Are indices in trouble ?

SO...we had our 1st high volume selling since June, reasons are many, but most of all, there was complacency, every trader got too comfortable with this ever resilient market.

NOW...the question is where to NOW ?

Before we attempt to answer that all important question, lets look @ RSI first :

SOX @ 39.23, only sector which is above 50 DMA by 6+ points

Nasdaq @ 39.00

Dow @ 32.08

S&P 500 @ 31.94

IF we look @ these RSI numbers, most technical followers should be elated, that we are @ extremely low RSI and is considered "deeply oversold " and @ good entry point......

IF we look @ internal carnage of this market, it was this bad :

Down volume led by in NYSE @ 31.69 to 1 in NYSE

Declining stocks led by 19.30 to 1 in NYSE

Nasdaq fared a touch better :

Down volume led by 10.18 to 1 

Declining stocks led by 6.16 to 1

These internals are a reflection of extreme pessimism, means we are "deeply oversold" or @ good entry point.

Instead of "fear" taking over, this is a time to think long term seasonality of Q4

Q4 is always bullish, which may be starting earlier than expected, in terms of entry in major Nasdaq stocks.

I personally believe that this kind of selling cannot be sustained, we may have seen the low or maybe 1% from low......

Buying low and selling high, is a well known strategy, we may have "overreacted" to low rate impact on US economy......

SO...it is your buying opportunity which only comes every 90 days or longer......

Good luck with your own strategy and comfort level.

BLOG does NOT give buy or sell.

Saleem

Posted in: Mixed