7/06/2010

A short term bounce is logical....

  • This is a holiday shortened week. Expect very light volume.
  • We have seen selling for last 9 out of 10 days. As a result market is oversold and a bounce here is logical next move.
  • The selling has resulted in the MM primary indicator reaching extreme zones.
  • Rallies which start after such extreme readings are reached tend to be explosive rallies. They tend to be multi month rallies.
  • Such rallies offer opportunities for big gains if you are well set to exploit them.
  • In next few weeks to few months such rally will likely develop and that will be very profitable rally.
  • As of now unless I see a breadth thrust of 2 plus on cumulative breadth ratio and change in primary breadth ratio, I will not trust bounces.
  • A weak bounce will set up many stocks for further short sell.
  • In the short run to play the oversold bounce please see my RSI 2 scan post

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