Monthlong Decline May Yield to Rally

Since going extremely overbought at the beginning of March, followed by a crossover of the MACD shortly thereafter, we have had a substantial decline of over a month. Apparently, a very important change occurred at that time in that, based upon the Arms Index numbers, money has tended to leave rather than enter the marketplace ever since. That has produced higher Arms Index moving averages, all the way out to the 21-day moving average. But it has gone on so long that the AI is becoming oversold, suggesting an imminent rally. That is not be misinterpreted as a suggestion the long-term picture has become bullish, but it does suggest that on a short- to intermediate-term basis, we could see enough rallying to be worthwhile for a trade on the buy side for the more aggressive. 

Our stocks in this week's letter, shown below, are in the oil sector. The second chart below shows that oil appears to be starting to move higher again. That looks like an area that could be attractive for participating in the above suggested rally. ...183 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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