Earnings Season + Overbought RSI = Ugly Market
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Earnings Season + Overbought RSI = Ugly Market
Earnings Season + Overbought RSI = Ugly Market
By Joseph W. Sunderman (jsunderman@sir-inc.com)
1/24/2003 3:33 PM ET
Expectations on Wall Street were high leading up to earnings season. Many viewed it as an opportunity for the bulls to firmly reassert themselves. The market was very optimistic as stocks kept charging higher and higher.
During this period, the S&P 500 Index's (SPX – 861.36) nine-week Relative Strength Index (RSI) pierced its upper regression channel for the second time in seven weeks. Earnings season hasn't been a bust, but the corporate outlooks certainly have. As such, the market has lost ground for six of the past seven sessions. And today is a fitting touch to the past two weeks.
As it stands now, the RSI is at its lowest reading since October 11 (when the market was coming out of an oversold condition). In fact, the indicator has experienced one of the sharpest drops compared to the last couple of years. The RSI has gone from a reading of 56.89 to 40 for a net drop of 16.89. The previous time the RSI dropped this dramatically (16 or greater) was from August 24 through September 7,2001 (a decline of 16.11 points). Additional situations that saw the RSI drop this dramatically were July 14-July 28, 2000; March 31-April 14, 2000; and January 14-January 28, 2000.
With the momentum favoring the bears, it seems that the RSI will continue to drift lower amid erratic market bounces. Unless there's a positive economic report or a resolution to geopolitical risks, the bears seem to have everything going their way.
- Joseph W. Sunderman (jsunderman@sir-inc.com)
By Joseph W. Sunderman (jsunderman@sir-inc.com)
1/24/2003 3:33 PM ET
Expectations on Wall Street were high leading up to earnings season. Many viewed it as an opportunity for the bulls to firmly reassert themselves. The market was very optimistic as stocks kept charging higher and higher.
During this period, the S&P 500 Index's (SPX – 861.36) nine-week Relative Strength Index (RSI) pierced its upper regression channel for the second time in seven weeks. Earnings season hasn't been a bust, but the corporate outlooks certainly have. As such, the market has lost ground for six of the past seven sessions. And today is a fitting touch to the past two weeks.
As it stands now, the RSI is at its lowest reading since October 11 (when the market was coming out of an oversold condition). In fact, the indicator has experienced one of the sharpest drops compared to the last couple of years. The RSI has gone from a reading of 56.89 to 40 for a net drop of 16.89. The previous time the RSI dropped this dramatically (16 or greater) was from August 24 through September 7,2001 (a decline of 16.11 points). Additional situations that saw the RSI drop this dramatically were July 14-July 28, 2000; March 31-April 14, 2000; and January 14-January 28, 2000.
With the momentum favoring the bears, it seems that the RSI will continue to drift lower amid erratic market bounces. Unless there's a positive economic report or a resolution to geopolitical risks, the bears seem to have everything going their way.
- Joseph W. Sunderman (jsunderman@sir-inc.com)
É apenas a minha humilde opinião, para qq outro esclarecimento é favor consultar: http://www.miniclip.com/askjoe.htm
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