Tuesday, January 26, 2010
Oversold bounce?
Here's another look at Flowserve (symbol FSV). Last time we noticed was run up, and that a correction was due. At that point the market still looked good, but within a few days it became clear FLS was indicative of the bigger picture. First there was the Climax High in the Nasdaq, and then a down day on a sharp increase in volume. And very shortly after that we had the mini-crash. Sad but true.
The chart also shows the daily numbers of Stocks Down >= 3 Consecutive Days plotted as a breadth indicator. It's in the second indicator window, plotted in magenta. When it spikes up above the baseline, as it has yesterday and today, an oversold bounce is usually imminent - although not always. Sometimes it will remain elevated for a few days, and subside more slowly, as happened during the recent bear market.
Notwithstanding Flowserve a number of stocks have been relatively unafected, either pulling back to breakout points without breaking down, or otherwise forming constructive basing patterns (accumulation / distribution remaining over 50%). So a bounce is within range on this basis too.
The chart also shows the daily numbers of Stocks Down >= 3 Consecutive Days plotted as a breadth indicator. It's in the second indicator window, plotted in magenta. When it spikes up above the baseline, as it has yesterday and today, an oversold bounce is usually imminent - although not always. Sometimes it will remain elevated for a few days, and subside more slowly, as happened during the recent bear market.
Notwithstanding Flowserve a number of stocks have been relatively unafected, either pulling back to breakout points without breaking down, or otherwise forming constructive basing patterns (accumulation / distribution remaining over 50%). So a bounce is within range on this basis too.
// posted by gigascanner @ 7:39 PM 
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