The markets rallied higher again today mostly due to plummeting oil prices. As I have stated over the last few days, I would prefer to see the indices get on the same page and rally into an overbought, preferably very overbought state.
Today's rally caused the scenario that I have been waiting for to occur, almost. QQQQ moved further into an overbought position while the other major benchmarks are teetering on overbought levels. I am still patiently waiting for a set-up but at this juncture I am almost certain that my wait will be over shortly.
Did you see OIH today? After a jump of over $2.50 early in the day the Oil Services ETF fell back losing all gains and then some to close at $126.15. Today's action pushed OIH into most oversold we have seen the indice in well over a year. A short-term bounce looks inevitable at this juncture.
Oversold/Overbought levels for January 11, 2007
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SPY - 64.4 (neutral)
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DIA - 68.5 (neutral)
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IWM - 60.5 (neutral)
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QQQQ - 86.5 (very overbought)
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OIH - 9.10 (very oversold)
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Have a great night!
Andrew Crowder, Chief Investment Strategist,
www.crowderinvestments.com