I hope some of you readers benefited from the call to be in cash made last week. While not as exciting as calling and nailing tops and bottoms, sometimes its just the right thing to do. With the markets having had quite a fall in the last few days, its time to turn to turn to our trusty ol' McClellan Oscillator to see how oversold the markets are here. And the answer, as can be seen in the two year daily charts below, is quite a lot! Specially the Nasdaq McClellan Oscillator which is at its most oversold level since last June.
As the regular readers of this blog know, this indicator has proven to be quite useful in the past but only time can tell how much this counts for in the news dominated markets we currently have. While this in no way means that the market starts bouncing from tomorrow, what it does mean is that the odds favor a short term bounce here.
I would be very cautious starting new short positions here. If you are already short, now would be the time to take some profits off the table, if you haven't done so already. And if you want to go long here, consider keeping tour positions small and be nimble out there.
I will be back later with Chart of the Day.
Take care and good luck!