Two Extreme Readings In The Market

Looking over the SPDR S&P 500 chart, it is quite easy to see that we are “oversold”. But how much have we sold off? Well, I came across two extreme readings that we have not seen in a long long time.

The Chart

One of the extreme readings is how far we closed from the 10 day Simple Moving Average (SMA).  We closed 10.65% away from the 10day SMA. That is the furthest reading we have seen since the 2008 closing low on 11/20/2008 when we closed 13.28% away from the 10 day SMA.

The second extreme reading that I see is in the RSI. While Oversold/Overbought indicators only go so far, I still believe RSI is a good way to indicate how much we’ve sold off. When I see an extreme reading like 90+ or +10, it typically means the reward to the upside/downside of that stock (in this case the $SPY) is limited. We either need a retracement or consolidation before risk/reward becomes favorable again. Today, the RSI closed at 10.16 (according to FreeStockCharts.com). From what I see from another charting service, that is the LOWEST its been since July 23, 2002 and 3rd lowest over the past 10 years (lowest reading on 09/21/2001). Now that is extreme.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tags: $SPY, $SPX

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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