Another economic number comes out much less than expected as durable goods not so good. We prepared you for this weeks ago as we stated the norm for earnings as well as economic expectations would be coming down and most surprises would be to the downside.
The DOW is now beyond stretched and extended to the downside, about 2,200 points under the longer-term 200 day moving average. In just the past 5 days from peak to trough, the DOW has dropped a whopping 2,100 DOW points. Combine that with the VERY EXTREME bearish sentiment numbers and ?
We put a question mark at the end of that sentence because we could have said the market was stretched and extended to the downside at around 1,200 points, 1,500 points, 1,800 points. This leads us to one of our rules of bear markets, that being oversold can become more oversold. Stretched and extended to the downside can become more stretched and extended to the downside.
So…just because we are at this point, it does not mean we bounce or rally to narrow the difference. It just means the conditions are there and would not be surprised by a narrowing. Just keep in mind, it would not change the big picture.
Unless something crazy happens (probably will), we will not be writing to you until after the Christmas break. At this time, my staff and I want to wish each and everyone of you a happy, healthy and safe holiday.