Chris Rowe

Is the Market Reversing?

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Again, this is a key factor. The market is considered to be oversold, and in low risk territory when less than 30% of stocks are on buy signals. We just got that reading, followed by the buy signal.

To put it in perspective, that's what we saw at the green arrows circled in blue in September 2001, August 2002 and October 2002. So, I don't think we'll get a quick week-and-a-half blip like we did in the early stages of the sell-off in the year 2000. Those two small rallies occurred when 41% and 45% (respectively) of stocks on the NYSE were already flashing "buy" signals. The recent signal came after only 25% were showing buy signals.

More and more stocks are moving to buy signals. This means the latest trend is that more and more stocks are able to break through levels of recent resistance. This means that -- at price points where sellers stepped in and forced prices lower in recent history -- the sellers are either no longer there, or the buyers are so strong that they are pressuring stocks higher anyway.

So this is your signal if you want to play the intermediate-term rallies in what we still view as a long-term downtrend. If you have bearish positions, you should consider getting out of them or reducing bearish exposure. And if you want to make sure you maximize the profit potential without getting into the areas of the market that will likely fail, then you should sign up with my options trading service The Trend Rider!

Chris Rowe is the Chief Investment Officer for Tycoon Publishing's The Trend Rider. To learn more about him, click here to read his bio.