If we had to craft a scenario, I would say an oversold rally should start sometime in the next few days, and that should last toward the end of the month. I do not expect the type of rally we had in the final days of June; the indicators are simply not lined up as they had been then. I suspect strongly that such a rally will fail. I suspect the number of stocks making new highs will fall short of previous readings. I also expect the oscillator will be at a lower high. Further, can you imagine if the market rallied on news that the folks in Washington had finally worked out a deal? Sentiment would probably change in a heartbeat.
But, at the very least, I can finally make the case that the market will become somewhat oversold in the next few trading days.
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