In focus: No buy signals yet

By Lawrence G. McMillan

Despite a rather severe oversold condition, there have been no actual confirmed buy signals issued yet. This oversold condition has persisted for the past couple of weeks, spurring modest rallies, but all that seems to have done is to ease the oversold condition a bit and make way for the next wave of selling, such as we saw today.

The Standard & Poor’s 500 Index ($SPX) managed to rally to 1,335 yesterday, and then backed off dramatically. We had already stated that 1,340 was a resistance area, and we fully expected that any oversold rally could challenge that level and perhaps overshoot it to the declining 20-day moving average. However, that oversold rally was so slow in taking place, that the 20-day moving average of SPX is now down 1,340 as well. Yesterday’s highs at 1,335 seem to be about as close to a test of 1,340 as we’re going to get on this rally attempt...

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