In spite of the mixed, two-day rally, the market remains oversold with the 2-period RSI of our Country Fund Universe at 34.02. Overall the market is still being driven by rumors from Europe (too many to list), and by bursts of short covering, especially from those who become despondent that the world has not come to an immediate end.
Eventually this will pass as all periods of uncertainty have in the past, and volatility will lessen. The key is that Europe goes one step at a time. Merkel’s interview yesterday (if she has the support) assisted the market and this morning’s downgrade of the French banks was expected and priced in. Pieces like this lessen the likelihood of a market meltdown and certainly remove bullets from the short sellers’ chambers. Again, this will go day by day and we’ll trade accordingly and by the rules.
The above is from Larry Connors’ Daily Battle Plan.
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Larry Connors is founder and CEO of TradingMarkets.com.