Oversold Stock Market Rally Coming!

By: Darah_Bazargan

The ever changing nature of the stock market will often boggle analysts if the current price information displays an unclear message. There has always been, and there will always be a fascination to wrongfully challenge what the future holds, instead of interpreting what’s at hand. It’s as if what is already known is simply not enough.

Such aspects should never be the primary tool of one’s own decision making. In fact, this is very reminiscent of my encounter with one wise expert on Wall Street. He is a seasoned grizzly who has weathered decades of all different market climates and his ever influencing demeanor once expressed to me, “Don’t tell the market... let the market tell us!”

Many have already come forth with bottom expectations, but none hold any convincing basis for this belief. With regard to the averages, the message across the board is simply no message at all. The only, if any, ‘take away’ from this most recent emotionally inspired wave of selling has served as an oversold condition. No reversal has transpired to even consider a change of events.

BUT, the last thirty minutes into Friday’s close did reveal a heavy interest of buying for reasons we will soon find out next week. Any follow through of this will result in a swing low, but I must caution those who feel this may in fact be the more important bottom. Let me explain.

Even in the perverse of markets, rarely do stocks ever go down and then turn back up to form a ‘v-bottom.’ These particular bottoms are suspect and almost all fail. A true bottom worthy condition must present a subsequent retest of the low or in the very least, find support near the general area to confirm that prices can hold despite all of the bearish news.

Bottom Line:

After a second low is presented, odds increase tremendously for an oversold rally into year end. Leading into the second low, divergences will erect on all fronts and most of the selling pressure should be ‘wrung’ out. Below is several examples to further underscore this very sequence.
NDX 100- Daily Chart


In case Friday was not a low of some kind, a bottom will soon be realized in the coming days.

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Darah
www.thecompletecoveragereport.blogspot.com

© 2012 Copyright Darah Bazargan - All Rights Reserved

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