Market Indices Reverse, Oil Still Sticky

After a dramatic decline and oversold levels not seen since 2011, the market indices IWM, SPY, and QQQ bounced sharply late last week and into the beginning of this week.

For a look at how oversold we were, check out this breadth breakdown of the Dow Jones US Sectors on 10-13:

Image Caption: Each Dow Jones Sector broken out by breadth, number of components and trend direction. Can see nearly every sector had scores in the 80-90s, and on a comparative basis can look back these were the highest scores in many months. Heatmap in the bottom pane shows the market was consistently negative since beginning of September, foretelling the decline.

There’s only so much lower you can get than > 90% of stocks trending down.  The only safe haven was Real Estate / REIT related.

On Friday of last week, the IWM confirmed a reversal, followed by SPY on Monday, and QQQ on Tuesday.

As of today, all three indices have indicated some semblance of a pause in the advance, suggesting some pullback, but it’s too soon to say the recent lows will be threatened.

SPY:

QQQ:

IWM:  Rallied right into the last supply line (orange dots) at ~111.25.

Another market driver, Crude Oil, is still mired in a decline.  Can see resistance (orange dots) ~$85.