Strategies for Short Term Traders: Prices Need to Adjust to Economy’s Pace
The United States is by far the most oversold market in the world today, something we don’t often see. Multiple days of 2-period RSI readings under 10 combined with numerous ETFs in oversold territory is a reflection (or a recognition) that prices needed to adjust to reflect the slower economic pace.
The S&P has lost approximately 5% this month and yesterday Reuters reported that this is the longest loss in the S&P since the near bear market bottom in February 2009. All this adds up to a market that is likely to bounce and likely within a day or so. On Monday, I said the best scenario would be for a sharp two-day sell-off, scaring a lot of the weak money out of the market. Monday and Wednesday saw that two-day sell-off and even though I don’t see the level of fear I’d like to see here, it does exist. Another good day down and it will really exist.
The above is from Larry Connors’ Daily Battle Plan. To learn more about the Daily Battle Plan – including access to Larry’s daily ETF trading signals, click here for more information.
Larry Connors is founder and CEO of TradingMarkets.com.