Conventional wisdom states that an RSI value below 30 indicate an oversold condition and this is especially relevant for longer term timeframe such as a weekly chart. I used the weekly data for the NYSE Composite Index going back to early 1980s and used the RSI as an indicator. The resulting chart incorporating weekly data up till 10th October is displayed below (click on the chart for a larger image).

To my surprise last Friday’s close capped one of the worst oversold market in history as indicated by the above chart with the RSI hitting a low of 13. Wall Street’s pulse can now barely be detected as unprecedented market panic delivered a knock out blow which drove the RSI to a grossly oversold position.

So the question remains whether Wall Street will remain out for the count, or whether it will pick itself up and live to fight another day. If history repeats itself, and if the current situation is not so different from previous panics, then lessons of the past would have us expect a short term rebound as the market recovers from its current grossly oversold condition.

While it is safe to say that the stock market moves to its own rhythm which defies mortal man’s attempt to divine its future direction, it is also not unreasonable to assume that US equities are much closer to a significant market bottom after last week’s sell off.

As always, caveat emptor.

It took me half a day to find the source of the problem. Fortunately the solution is available on McAfee’s support forum. Easy answer: Remove IE8 Beta 2.

So it looks like the Beta 2 is off limits for the time being, until Microsoft gets their act together.

The SEC’s traditional role is to regulate the stock market and prevent corporate abuses relating to the offering and sale of securities. In its recent moves the SEC has dramatically reversed its role and instead aided one group of market participants in artificially propping up prices in ailing financial companies. This is tantamount to ramping the markets.

The SEC is effectively changing the rules in mid game for market participants. In particular the new rules have benefited the bulls tremendously while severely shackling the short sellers. You can’t have a free market when the regulatory agency so blatantly tilt the playing field in favor of a particular group of players when the game is not going their way. I don’t know how the rest of the world sees this but from my corner here it looks very much like blatant cheating! It is sad that the USA no longer practice the free market principles which they had been championing.

Then there’s the usual search for a suitable Wordpress theme, followed by the tweaking and tinkering to customise the look and feel of the website. While the site is still far from complete, the process has reached a stage whereby it is ready to go live.

Hence the old Textpattern driven blog has been laid to rest and with immediate effect this site is now powered by Wordpress.

]]> http://dannytam.com/2008/02/06/becky/feed/ http://dannytam.com/2008/02/06/warren-and-becky/ http://dannytam.com/2008/02/06/warren-and-becky/#comments Wed, 06 Feb 2008 02:29:43 +0000 danny http://localhost/textualthoughts/?p=128

]]> http://dannytam.com/2008/02/06/warren-and-becky/feed/ http://dannytam.com/2008/02/06/becky-and-ashley/ http://dannytam.com/2008/02/06/becky-and-ashley/#comments Wed, 06 Feb 2008 02:28:50 +0000 danny http://localhost/textualthoughts/?p=127

]]> http://dannytam.com/2008/02/06/becky-and-ashley/feed/ http://dannytam.com/2008/02/05/warren/ http://dannytam.com/2008/02/05/warren/#comments Tue, 05 Feb 2008 21:07:55 +0000 danny http://localhost/textualthoughts/?p=125

]]> http://dannytam.com/2008/02/05/warren/feed/ http://dannytam.com/2008/02/05/kids-enjoying-foot-massage/ http://dannytam.com/2008/02/05/kids-enjoying-foot-massage/#comments Tue, 05 Feb 2008 21:01:12 +0000 danny http://localhost/textualthoughts/?p=124

Kids enjoying foot massage.

Smiling Warren, originally uploaded by Danny Tam.

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