The expected test of the recent lows came early this morning and once again the bulls came roaring in to lift the market off of intra day oversold levels. Even with the bounce the higher-beta indices of the Russell (IWM) and Nasdaq 100 (QQQQ) remain in oversold to near-oversold levels, respectively. While IWM and QQQQ move lower the major benchmarks, the Dow (DIA) and S&P (SPY) continue to climb higher. After today's push, the Dow rests in an overbought state.
The market seems to be at odds, at least over the short-term. We have not seen the major indices sit in an oversold (IWM) and overbought (DIA) on the same trading day in quite some time. In most cases, the higher-beta sectors win out, but given the string seasonal tendencies that remain until years end I have to think we are going to at least get a test of the recent highs in the IWM and QQQQ. The next 7-10 trading days should be quite interesting. Stay tuned. Have a great night!
RSI Wilder (5) for December 19, 2006
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SPY - 56.3 (neutral)
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DIA - 79.5 (overbought)
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IWM - 28.4 (oversold)
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QQQQ - 40.3 (neutral)
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Kindest regards,
Andrew Crowder
Chief Options Strategist
Crowder Investment Research, LLC
www.crowderinvestments.com