Stock market going to end now?

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Its been rough this final week in trading stocks or equities. For seven straight sessions the market has gone down. SPX has plunged from 1260 to 1158 just about one hundred points within a week. That is certainly as severe as it gets and shakes up weak hands, traders give up and sell and take a loss.

But what it does it creates severe oversold conditions and than the market rallies and rallies strongly to the upside. The McClellan Oscillator is now at 300 readings with curved hook to the upside. I’m not going to say it can’t go down further but its very unlikely. When these readings occur typically a rally breakouts to the upside. That is certainly what it has done before and you should look at the chart for August 8 2011. The market rarely goes down straight.

This has been a rough number of months because the current stock market is caught in a range and it seldom finds any impetus to go higher because the constant European debt crisis which has been hounding it for months. First it was Greece, and than it was Italy, and now it is Europe in general. Than the Super committee failed this week adding towards another set of bad news. Over the Holidays depressing news is lot much more common than the good news and this headline driven market place has taken a plunge. But sooner or later a rally comes around the horizon due to oversold problems and that’s exactly where lots of trading takes place to make money.

We now have been sitting on the sidelines during this last 14 days abiding our time. We’ve no losses around the books yet. When the market place rally comes if it does, to we benefit from the upside move. So keep the powder dry, there will probably be lot of shooting of the turkeys. Yeah the turkeys who have pushed the stock market down when the main players have been out, basking in sun, and there was nothing at all to do in the low grade cubicles of the minions, left behind to mind the desks.

 

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