Morning Update: Greetings from ancient Rome!

Greetings from ancient Rome!

November 8th: the day when small cap stocks and the Dow Jones Industrial Average began working off the overbogught conditions brought on by the strong rally that began October 4th.  While this was going on, the S&P 500 and the Nasdaq jumped to new highs, right up to yesterday. The savvy trader may have noticed the odd condition of the market since November 8th, with this dispersion of outcomes.

It is actually not that strange.  A wave of profit taking swept through most of the market at the same time that traders were crowding into a handful of large cap technology companies.  Those big stocks saw some profit taking yesterday, which led to a pullback in the S&P  
and Nasdaq.

The best thing to do right now is wait and watch.  Stocks remain a buy the dip environment, and now the dip is taking place.  Let's see what indexes, sectors and groups reach oversold levels and then demonstrate some positive divergences first.  Then we will know what to buy.

Oil started selling off first, reaching the rally high on October 25th.  Short term indicators are beginning to show positive divergent behavior, not so much in the intermediate term yet.  How is this for a classic example of sell the rumor, buy the news. Talk first appeared two weeks ago regarding countries like America and Japan releasing  
some of their strategic oil reserves.  Oil was already showing some weakness, but those conversations tipped the scale to the downside.   
The decision was made today to release some reserves, with India, China and Sout Korea joining the US and Japan in the flood.  Oil is flat so far today.

Would you like to see a cool chart?  Check out the US 10 year bond (the interest rate, not the price).  It is currently attempting a breakout from an ivnerted head and shoulders. Key word here is  
attempting.

There isn't anything oversold on an intermediate term basis as of this morning.  The evidence still suggests we will see new highs in the major indexes by the end of this year.  We are probably in store for some heightened volatility for the next two weeks, however.

Reminder, there will not be a Thursday night Live this week, but I am hosting the normal once a month Saturday special.  The topic is the  
oldie but precious Dow Theory. Here is the link:

ROMULUS is inviting you to a scheduled Zoom meeting.

Topic: My Meeting
Time: Nov 27, 2021 10:00 AM Indiana (East)

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PAX!
ROMULUS
Rome by Claudio Hirschberger is licensed under unsplash.com

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