A few weeks ago when we called for a short-term pullback of 4 to 5%, it was due solely to the short-term overbought condition of the major indexes above their 50-day moving averages, and that the short-term technical indicators had triggered a short-tem sell signal.
However, another condition unexpectedly took over, the collapse of oil prices, which suddenly plunged from $75 a barrel three weeks ago, to just $56 as of yesterday’s close.
And now we have the crisis in Russia and collapse of its currency, and stock market, brought on in no small part by the collapse of oil prices.
So far, in the U.S. we have only the expected short-term pullback to alleviate the overbought condition.
And the short-term indicators are now in their oversold areas – if this is just a short-term pullback.
To read my weekend newspaper column click here: Congress has Guaranteed the Secular Bear Market is Not Over
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Sy Harding publishes the financial website Street Smart Report Online and a free daily Internet blog at Sy’s Free Blog. In 1999 he authored Riding The Bear – How To Prosper In the Coming Bear Market. His latest book is Beat the Market the Easy Way! – Proven Seasonal Strategies Double Market’s Performance!
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