Gearing Up for an Oversold Bounce

The strong trend that started last October has not broken down but over the past few weeks it has grown soft. The market seems a bit confused here and a trading range has emerged. The technical picture has become a bit murky as a result of a hawkish fed statement and some poor earnings reports from key companies this earnings season. At this point it is useless to try and make long term predictions about where the market might go. To do so would just be an exercise in futility. In situations like this we have to follow the acknowledge what is right in front of us and forget about what may or may not happen a few weeks down the road. So what do we have in front of us right now? We have a nasty head and shoulders development on the major indices. Even so, the neckline support on these patterns has held on all but the NASDAQ 100. The breakdown of the NASDAQ 100 has not encouraged follow through and it looks like buyers are once again accumulating in anticipation of an oversold bounce. How strong will the bounce be? We have to wait and see. If the bounce is weak, it will be a good shorting opportunity.