Market Update: More Oversold

The US markets are in a medium-term downtrend and are becoming increasingly oversold, which will probably (eventually) lead to a powerful short-covering bounce. Here is the evidence: The first table below shows that New Lows outnumber New Highs on all time-frames. This is a downgrade from my last update where all-time highs still outnumbered all-time lows. The second table shows Oversold stocks outnumbering Overbought stocks on all timeframes. The number of oversold stocks has also increased compared to last week; however, the number of ridiculously oversold stocks hasn't changed so things could still get a lot more oversold. Finally, the third table shows the percent of stocks above the 20 day moving average is getting to extreme levels and has declined from 27% last week to 16% this week. The percent above the 50 day has dropped by 12% from last week and the percent above the 200 day fell by 6%. The only bullish sign is that 2/3 of stocks are still above their 200 day moving average, which means the long-term uptrend is still in tact for most stocks.

US Stocks Making New Highs and Lows 19-May-2010
Period	New Highs	New Lows	Hi vs Lo	Hi/Lo Ratio
20 day1	49	837		0.1
50 day1	36	547		0.1
52 week1	23	109		0.2
All-Time2	15	39		0.4
1 Out of 5030 US Stocks on FINVIZ  2 From uglychart.com based on today's close (includes funds)

US Stocks in Overbought and Oversold Conditions 19-May-2010
Level	Overbought	Oversold	Overbought vs Oversold	OB/OS Ratio
Mild RSI 60 vs 40	266	1840		0.1
Moderate RSI 70 vs 30	55	336		0.2
Extreme RSI 80 vs 20	11	29		0.4
Ridiculous RSI 90 vs 10	0	1		0.0
1 Out of 5030 US Stocks on FINVIZ

US Stocks in Relation to their Moving Averages 19-May-2010

Related Posts:

• Market Update from Last Week
• US All-Time Highs Last Week
• Recent Multiple Moving Average Charts (US, Canada, China, Gold)
• Do All Time High Stocks Outperform? Research suggests they do.