Hedge Fund Redemptions continue to dictate market action, and continues to do so during the last 15 minutes of each market session – just as we saw today. Now the markets are setting up for a major show down much like we saw last week. The technicals working in the bulls favor, is that almost any indicator you look at (i.e. stochastics, MACD, RSI, etc, show a significant bullish divergence, meaning that while the indices continue to fall, the indicators are showing strength or bullishness.
Also in the favor of the bulls is the lack of volume on the part of bears. In fact, since the huge 600-point rally that the bulls had last Thursday, volume has dropped off each day since. We are also extremely oversold in this market, and we could see some serious buying interest, as each of the three previous times we have tested these price levels, we have rallied.
Here’s the Nasdaq and S&P charts…
