Oversold

S&P futures are up 7 points this morning, we have a hostile bid for TIN by Int Paper this morning. Yesterday,The election in Portugal seemed to be a positive as the government intends to play nice with the EU/IMF/ECB. On the Greek front, there was a growing call for private bond holders to share the burden of a second bailout. The only problem is that even an agreed-to restructuring would create a default and trigger a "credit event" in terms of credit default swaps, etc. Futures were flat as there was no economic data scheduled for release before the opening bell. 

Monday's session open a bit lower and attempted to bounce quickly putting the high of the day on the chart in the opening moments. Between 10:00 am and 11:00 am the SPX put what appeared to be an intra-day double bottom on the chart and buyers rushed in. The market chopped sideways until about 1:30 and then the bears took over and rode it down. 

There is much to hang on to if you are long this market except that the market is oversold, the ADX is hanging on and a couple of contrarian indicators. We have Investors Intelligence Report that shows that pessimism at an extreme high. We have a great deal of stocks below the 20dma (greater than 75% equals rally) and the ten day average of TRIN is at extreme level and we had five ticks greater than a thousand, all were negative and 14 ticks greater than 900 and all were negative, signs of minor capitulation.

3.2% of the SPX are above their five day moving average, 6.6% are above their 10 day average, only 10.8% are above their 20 day moving average, 22.8% are above their 50 day moving average, and 64.2% are above their 200 day moving average.

MO is oversold

I'm still sticking with my 40 point rally call of yesterday, I have been bearish for a long time on this market see my previous posts. Since the inception of this Blog I have been telling you its a house of cards and that it will stay up or go up as long as there is QE. Without QE its toast. So long term I'm bearish, short-term cover shorts for rally to 1325.