Certainly not the typical way to start out November. But what seasonal tendency has actually lived up to its historical billing lately?
The NDX tested the 1700 level today going as low as 1702 level. The Russell 200 (IWM) is now oversold for the first time since 7/17 when the RSI Wilder (5) was 21.5. Looking back over the past year when IWM moved into an oversold territory a short-term bottom was usually signaled within a few trading days.
I expect to see the market test the 1700 level again which should signal the bulls to move back into the market, at least initially. If the NDX breaks below the 1700 level and is able to hold there then I think the market could be setting up for a decent correction. Watch this area closely over the coming days. Who knew, just in time for the mid-term elections! Most of my loyal readers know what this means as I have stated repeatedly the mid-term election phenomenon when the market has a positive September and October. If you were unable to read the post here it is: October 10th.
RSI Wilder (5) for November 1, 2006
- SPY - 33.1 (neutral)
- DIA - 36.3 (neutral)
- IWM - 27.4 (oversold)
- QQQQ - 40.2 (neutral)
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Andrew Crowder, Chief Investment Strategist, Crowder Investment Research, LLC