Oversold Bounce, But...

It’s a tough call to make here as we move into options week. Stocks are oversold as well as indices, but the S&P closed the week below support – most technicians would agree that’s a warning sign that lower prices are yet to come. The NASDAQ on the other hand closed right at its long term trend line, though it is hanging by a thread. It must reverse and make a move higher from this level or a downtrend will be confirmed. Right now we are in the camp that believes the selling is not yet over, but that a near term bounce is fast approaching. We saw beginnings of such a bounce on Friday.