Wednesday, September 10, 2008

NYSE still not oversold....

You would think with a 3.6% loss in a single day the market would reach oversold levels. Unfortunately not.

Also compounding the problem is the lack of oversold conditions in the NYSE Summation Index:

Having said that I would expect a bullish divergence in the Summation Index but it's likely not to occur until it gets into the -600 to -800 range. If there was no bullish divergence and the Summation Index continued its push higher it will create a situation where the indicator is overbought and the NYSE is stuck in a decline; setting up a crash scenario.

Damned if you do...damned if you don't.

Dr. Declan Fallon, Senior Market Technician, the free stock alerts, market alerts and stock charts website