The Market Starts The Year Oversold
The SPY (SP500 ETF) started the year down 1.70%, and it immediately triggered its first oversold reading of the year. As you can see in the chart below the average amount of SP500 stocks above their 3,5, and 10-day moving average is at a level that has historically produced bounces. These bounces have allowed opportunistic traders an opportunity to make some money on the long side and have given others better prices to sell into days later.
Welcome to 2016 and our first oversold reading of the year. We will all be watching to see if this oversold reading acts the same way it has nine out ten times over the last couple of years–with a bounce.
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