Russell 2000 Weakness Pulls Market Down
Yesterday I stated that the market was extremely overbought and that even if the market rallied 100-150 points I would be looking to sell if I was a long term investor. I would wait for the market to pullback and make a higher low before reentering long positions. At one point today the DOW was up around 100 points trading at the 17314 level. Extreme selling came in late afternoon and the DOW closed at 17168, down 48 points on the day. Even though the DOW and S&P Futures were strong, the overbought condition along with the weakness in the Russell 2000 dragged the market down. I am looking for the market to pullback and make a higher low in the 16400-16900 range. I then expect the market to rally and continue to make a series of higher lows through the end of the year.
Today oil closed at 45.14, below the critical 45.48 number on the daily charts. I think oil is in trouble. I am still on the sidelines but I am looking for a pattern on the daily charts to setup for a short entry.
Gold was down over $10 today. When gold traded up to the 1191 level I stated that gold was significantly overbought and that I was looking for a pullback on the daily charts. Gold has pulled back almost 30 points. I am still waiting for gold to get a severe oversold condition on the daily charts. I would then look to buy gold for a trade lasting 1-6 business days.