Dealing with the Oversold Condition
January 21, 2015 – Since January the Dow Jones Industrial Average has had triple digit gains and losses, 8 out of the 12 trading days. This is the year of volatility. As of yesterday the Dow Jones Industrial Average was up 94 points. By 1030AM it started to decline and at one point the Dow was down 140 points, before reversing and closing positive on the day closing up 3.
The market is currently trying to work off this oversold condition. The Dow could get somewhere between the $17600 and $17800 and if you are a long term investor now is the time to sell. The financial stocks are weak which again makes it difficult for the market to go up when the financials are lagging. Yesterday, Morgan Stanley reported disappointing earnings and gold is in an up-trend. Steve was looking for a pullback on Gold, he thought that maybe the $12.15 – $12.20 mark was a good target, but after review the target has to be raised to $12.30 and $12.40 range. At that point Steve would be a buyer of gold.
Oil is still stuck in the $44 to $49 range. If there is a bounce in the market while working with the current oversold condition, Steve would be a seller into equities. With an issue in the financials the market will see some pushback going forward. Tune in tomorrow for more market facts.