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Market Is Oversold And Rally Is Ready To Roar Ahead

By Tim KnightStock MarketsJun 27, 2022 10:43AM ET
www.investing.com/analysis/market-is-oversold-and-rally-is-ready-to-roar-ahead-200626346
Market Is Oversold And Rally Is Ready To Roar Ahead
By Tim Knight   |  Jun 27, 2022 10:43AM ET
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I can’t remember a time in my life when there seemed to be such universal agreement that:

  1. The market is really, really oversold;
  2. It is going to rally mightily, and much farther than anyone dare imagines.

Even the most wild-eyed bears have fixated on 4,400 on the S&P 500 as their target, which is well more than 10% above current price levels. As I mentioned in my posts last night, even former perma-bear (and I do mean perma-bear, as in since its inception in February 2009) ZeroHedge has fully joined the buy-equities-now bandwagon.

As for me, as you might guess, I’m not quite in that party. To be sure, I don’t feel like the kid in a candy store that I have at times earlier this year, but when I look at the /NQ futures , what I see is a market that can easily be argued to have burned off its oversold condition, even now:

NASDAQ Futures Chart.
NASDAQ Futures Chart.

Those two dashed lines represent the important price gaps we saw this month (and, boy, were they glorious when they happened). The /NQ has been the most robust of the major equity futures markets, recovering to this levels the most swiftly and powerfully. In the wee hours of this morning, it almost perfectly sealed that second, higher gap.

This is in contrast to, for example, the small cap futures, which go nowhere close to sealing its own gap. As a matter of relative strength, perhaps means the market as a whole has higher to go (which means the /NQ will simply blow right past its gap while the /RTY achieves its own) or maybe it means This Is All She Wrote, and once again, in 2022, this will have been a bull trap.

Russell 2000 Futures Chart.
Russell 2000 Futures Chart.

Given the wretched pounding I endured on Friday (having ascended to a lifetime portfolio peak on Thursday!) I am in no mood to be fearless. I am exceedingly light at right, with more than 50% cash (gack!) and will enter this week cautiously. Intuitively, I’m more comfortable waiting until June is in the bag before I get aggressive again, particularly since the fabled Tim Getting on a Plane signal takes place on Friday, and history tells us that can be a powerful market event.

Market Is Oversold And Rally Is Ready To Roar Ahead
 

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Market Is Oversold And Rally Is Ready To Roar Ahead

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Comments (22)
Paul Browning
Paul Browning Jul 17, 2022 5:50PM ET
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When there's "universal agreement" that the market is really, really oversold that's a GREAT time to SHORT.
John Lenkiewicz
John Lenkiewicz Jul 10, 2022 8:34PM ET
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I can’t remember a time in my life when there seemed to be such universal agreement.     You just haven't lived long enough. Were you trading during the dotcom bubble? Or the Hunt Bros. attempt to corner the silver market??  A market can stay oversold as long as it can be overbought.
Robbie Williams
gumnut Jul 04, 2022 10:12PM ET
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Damn dawg, you’re bad at this.
BUH lucky
BUH lucky Jul 03, 2022 10:46AM ET
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What is "time getting on the plane moment" supposed to mean?
Stephon Starrantino
Stephon Starrantino Jul 01, 2022 6:17AM ET
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Tim are you still bullish on the rally?
Jerome NY
Jeff_Musk Jun 30, 2022 9:55AM ET
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Cannot agree considering the so cold valuation. Dream ratio or PSR etc was real illusion. Market is not a virtual its real money.
James Victorino
James Victorino Jun 29, 2022 7:32AM ET
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Hopium. The guy is probably heavy long and taking on major losses.
Cody Sutton
Cody Sutton Jun 28, 2022 11:22PM ET
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Nailed it. 🤡
cqjhm poufc
cqjhm poufc Jun 28, 2022 5:36PM ET
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And, just like that, market TANKED today. LOL
James Victorino
James Victorino Jun 28, 2022 3:20PM ET
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Mr. Market says the selling is just beginning.
 
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