Once again, the market, particularly the Nasdaq, is oversold in these last rapid-fire down days off the top six days ago.
It is as if it has gone down too far too fast.
When the Nasdaq Composite, as measured by the blue histogram on the chart below, plunges to the lower green line, it is almost always, first, the prelude to a bounce, and then oftentimes the next up swing (see previous instances on the chart).
In addition, the Nasdaq is setup again for a “Turnaround Tuesday.” I last wrote about this Tuesday phenomenon Sept. 10th (see the link below), and Tuesday, the 11th, was a huge upsurge across the general market.
It is possible the market could go lower before the projected reversal into the end of the week but don’t count on it. This is still a bull market and right now the bulls need to prove they can stop this drop and run it up again as they have so many times before.
If the bulls can not rule the rest of this week…well, we’ll get to what that could mean in due time.
I’m expecting a bounce right now. Tomorrow is a day to focus on the open for longs in stocks, options and futures on the major indexes, but I always keep in mind what Trader Vic Sperandeo once said: “If the market doesn’t do what one expects, it is likely to do the opposite twice as much.”