The massive oversold condition that existed at the end of last week has
spurred a rally this week. When the market is as oversold as it got last week,
it usually rallies back slightly beyond its 20-day moving average. That
moving average is currently at 1350.
The equity-only put-call ratios remain on sell signals.
Breadth has been slightly positive this week, but the breadth indicators
continue to remain on sell signals and are still in oversold territory.
Volatility indices ($VIX and $VXO) took on very negative tones when
they rose sharply last week. $VIX above 21 is bearish for stocks.
In summary, we are in the midst of an oversold rally. Unless there is more improvement in
the intermediate-term indicators, this rally is just a short-term affair.