Tuesday, May 25, 2010

Equities: "A classic reversal day"

After getting down over 260 points, to 9,774.48, the DJIA closed down 22 at 10,043.75.
From Humble Student of the Markets:
US equities experienced a classic reversal day, where the market opened up spiked down, rallied and then closed at the highs of the day.

Combined with indications of a sentiment washout, this is a classic price reversal day that portends the short-term rally that I was looking for.
From Not so humble student (moi):
"Nearly 90% of S&P 500 Stocks Oversold"
This stuff is not exact, for example choosing one standard deviation as the oversold level is as much art as science. That said, combined with the "We're all going to die headlines" it's time to nibble. DJIA down 201 at 9865....
Here's the headline in question:
Hysterical MarketWatch Headline: "Warning: Crash dead ahead. Sell. Get liquid. Now." (SPY)