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Thursday, June 9, 2011

Short-term Oversold

The markets gapped up this morning and have put together a solid bounce out of short-term oversold conditions, with many stocks posting nice gains on the session. Nonetheless, bearish patterns remain in play on the major averages, and the bulls still have their work cut out for them before the correction can be declared over. Bearish patterns are still in place in numerous major and sector indices, and while it's always possible they won't reach projected technical targets, it's way too soon to draw that conclusion. Until proven otherwise, today's rally effort should be viewed as counter-trend. Strong support lies in wait in the 1230-1250 zone on the S&P 500, which is an area I'll be watching carefully if we undercut Wednesday's low. A convincing close back above the broken neckline is needed to put the bulls back on firmer ground.



Trade well.

-- Brinkley
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