Sep 09 2008
Extreme readings?
Have We Seen A Definitive Bottom Already? was asked on Trader’s Narrative yesterday. The post takes a look at using the number of Dow stocks above/below their 50-day moving average.
Very interesting. Apparently, there were no stocks above the average back in June. That was the first time since 2003 this was the case.
These sorts of things are often viewed in a contrary fashion. Unfortunately, the timing of overbough/oversold conditions being reversed is always a bit touchy. Obviously, the Dow didn’t stop falling until mid-July – and the question of whether that was the true bottom or not has yet to be answered.
Personally, I think this market still looks pretty weak. I’m not convinced at all by yesterday’s rally. To my mind it was a weak one, and one that was to be expected anyway based on the way Friday played out.
Here are some other posts which might interest you:
