Stocks Oversold At Extremes

Stocks Oversold - Another Down Day

The stock market had another weak trading session on Thursday. The S&P 500 fell 2.06% and the Russell 2000 fell 1.91%.

On the bright side, some of the hardest hit groups outperformed. The Nasdaq only fell 1.25%. EEM emerging markets ETF fell 1.01%. Facebook stock rose 1.3%. I’m not saying it wasn’t a bad day. I’m just looking for positive action to help me figure out when the market will hit a floor.

Stocks Oversold - Time For A Bounce

Many indicators are signaling the stock market is oversold. As you can see from the chart below, the 14-day relative strength index of the S&P 500 is at 23.02. This is well into oversold territory which begins at 30.

It’s below the trough reached earlier this year. The S&P 500 is down 6.9% from its recent peak and earlier in the year, it fell 10%. The RSI shows the S&P 500 is the most oversold since August 2015. The market quickly recovered from that correction.

The S&P 500 is in a 6-day losing streak which is the longest since late 2016. It fell below its 200-day moving average. I don’t follow the 200-day moving average closely.

The fundamentals of the economy and earnings determine my intermediate-term outlook. My point here is I don’t think the bull market is over because it fell through that level.

This has been a terrible week as the S&P 500 is down 5.5%. It would be its worst weekly performance since March if the week ended on Thursday.

This will be the first 3-week losing streak since June 2016. As you can see from the chart below, the CNN Fear and Greed index closed at 5 out of 100. It signals there is extreme fear in the marketplace.

The chart shows this is a similar panic level to the correction this winter.

Stocks Oversold - Details Of The Market

The VIX was up 8.8% to 24.98 and gold was up 2.96% to $1,224.52. The best performer in the S&P 500 was the gold miner, Newmont Mining, which increased by 7.1%.

1 2 3
View single page >> |

Disclaimer: Neither TheoTrade or any of its officers, directors, employees, other personnel, representatives, agents or independent contractors is, in such capacities, a licensed financial ...

more
How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.