Last week's indicator review noted that the major indicators continued to hold out weak, simply had stopped weakening, peculiarly amidst the pocket-sized caps. The weakness continued into the early on purpose of this by week, expanding the number of stocks registering fresh 65-day lows (middle chart), simply non taking the Cumulative Demand/Supply Index (top chart) or the Cumulative TICK to corresponding lows. This suggested a loss of downside momentum as well as sentiment, fifty-fifty every bit the fiscal sector was selling off furiously. As I noted inwards my recent postal service indicated, we've seen considerable sector rotation these by few days, alongside the weakest sectors (financial stocks; consumer discretionary issues) benefiting nearly from the brusk covering. At the same time, release energy stocks, which had been surgical operation leaders, accept moved to the bottom of the pack thank y'all to a commodity-related selloff.
As y'all tin come across from the meridian chart, these oversold weather inwards the Demand/Supply Index accept tended to yield rallies of intermediate-term duration. So far, we're seeing lower highs during these rallies as well as lower toll lows on the declines, which is the Definition of a deport market. I am non at all convinced that we've seen the ultimate lows for this bear, simply I've every bit good learned non to acquire by the indicators when they're inwards abrupt rally agency off a severely oversold condition.
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