Tuesday, August 02, 2011

Market Short Term Oversold

Today's market sell off has the S&P 500 Index down for seven days in a row. The S&P index has declined 6.8% in this seven day period. A result of this decline is the number of stocks trading above their 50 day moving average has declined to 14%, a level at which the market has rebounded historically.

From The Blog of HORAN Capital Advisors

As we noted in our prior comments and second quarter newsletter, the market does seem stuck in a trading range. Today's decline puts the S&P at the bottom of the range that began in late February of this year. Additionally, the market could be in the process of making a double bottom, if not a triple one.

From The Blog of HORAN Capital Advisors

Lastly, several of the recent economic data points have come in on the weaker side. Confidence has been negatively impacted by the actions in Washington over the last several weeks; however, we believe the weaker manufacturing data points are partly related to the supply disruptions due to the tsunami in Japan. In short, we do not see a strong economic recovery from this point, but we do not see a double dip recession either. We believe the economy is stuck in a slow growth environment, which may not improve until business uncertainty is lessened.

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