Got the Oversold Bounce
On Friday I stated that the market was oversold and I was looking for the market to rally 200-400 points over the next couple days. Today the market rallied 237 points and the S&P 500 was up 30 points. I said I was looking at the big ETFs such as SPY, SSO, and QQQ because I thought they were the best bet for an oversold rally. Going forward into the end of the year I think the market will continue upward with some backing and filling along the way. At year’s end I am expecting low-mid single digit gains in the DOW and Russell 2000, the S&P 500 to be up 3-8%, and for the NASDAQ to be up high single digits or low double digits.
I do see a slowdown worldwide. Even with all the stimulus the United States GDP is only 2-2.5%. China cut interest rates a couple weeks ago. I believe this slowdown will have a big impact on the market going into 2016. If I was a long term investor I would be looking to take money off the table at the end of the year and look for a good opportunity to reenter in 2016. I am not one to ride it out and hope for the best.
On Friday oil closed below the key level of 41.74. I now have a sell signal for oil on both the daily and weekly charts. Today oil pushed down to the low 40 level and then rallied with the market towards the end of the day. I am looking for a bounce up to the 44.50-46.50 range for a good shorting opportunity. I am waiting to see if oil can get an overbought condition on the daily chart.
Gold is dead money. At one point today gold traded up to 1091 when the markets were selling off overnight before fading and closing around the 1083 level. I am looking for an oversold bounce on gold. Once the oversold condition is worked off I will be looking for a pattern to set up.