The market has experienced a few up days since my last post.  This bounce is starting to alleviate the extreme over sold conditions.  The NASDAQ McClellan Oscillator finished up 13 points today to close at a –27.  This index has gone from a –63 to a –27 in just two days.  If we get another two days of this action, the market will move to neutral from extremely oversold.  Let’s look at the charts of the NASDAQ and S&P500.

The blue trend line I have drawn on this chart encompassed almost 7 months of support.  The longer the trend line the more significant it is, and this break probably means it is more than a regular pullback.  It looks as if the NASDAQ wants to rally into the 50 day moving average (~2,228).  I prefer indices/stock that live above their 50 day moving averages.  This is the reason I am on the sidelines right now.

The S&P500 looks very similar to the NASDAQ.  I would point out the volume patterns of late.  Big volume down days with light volume up days.  This bounce would be sellable into the 50 day moving average if this action continues.

The former leaders of this market (GOOG: 470.58 +6.18), (AAPL: 262.92 +5.11), (AMZN: 139.14 +1.92), and (GS: 147.54 +2.33) still have broken charts.  I think we still need more time for repair, but charts will set-up in the future.  The best position right now is cash.