Stock Market – Is The Market Oversold

The market has sold of sharply over the past few weeks but when you look at the big picture the uptrend is still intact. I’ve been bearish on the stock market since June 1st when I saw the small caps begin to break down which I wrote about here on this blog. Since then stocks have sold off considerably and are now reaching some of my downside objectives. The head in shoulders pattern in the small caps (IWM) has met its downside objective on Thursday. In the above chart of the S&P I marked off the 3 major retracements the S&P has experienced since this uptrend began which was about a year ago. You’ll notice that this recent decline in the S&P is almost exactly the same magnitude in terms of percentages and points as the previous two pullbacks. Having said that, I wouldn’t be surprised to see a bounce in the stock market which in my opinion will be another shorting opportunity. Lets see how things unfold.

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