Oversold Leads to Overbought

Yesterday I mentioned that TRIN and TRINQ suggested a bounce was close at hand. Check. Now those same signals are relatively overbought so while Friday may see a continuation to the upside, I would expect it to be somewhat limited. Of course I'll have to caveat that with the expectation that volume will be light, and that makes it much easier to move price.

Let's get into the charts:



Back to buys.



Buy.



Buy



Sell.

As expected after a big bounce, the sentinels flipped many signals back over to buy status, but BPCOMPQ remains on a sell. That keeps the system on a sell.

I am not sure what to expect Friday, but I don't see the sentinels giving a buy signal without significant follow-through to the upside.

I noticed that our sentiment survey was overly bearish for next week early on in the voting, but I just checked it again and it's moved to a much less bearish indication. I suspect it will remain on a sell for next week. I am very interested in how other surveys paint next week's sentiment picture too so I'll be watching closely.

That's it till Friday. Have a happy Thanksgiving folks and please take care if you're traveling. It's going to be busy out there.

 

[coolhand]

Looks like I was wrong about our sentiment survey. It moved back to a buy for next week.

 

[airlift]

Since the Sentiment survey moved back to Buy before Thanksgiving, could it be preparing a Bull trap and whipsaw action for next week?

 

[coolhand]

I think there's definitely the chance for continued whipsaw action. Tuesday's sell-off may have been a warning shot for further decline in prices. Bonds are still waving and backing off since QE2. But understand the Fed may do anything to keep this market afloat, so it's tough to be certain of what to expect. I'm going to err on the side of caution for now, but I'm willing to push some funds into stocks under the right circumstances.

Since the Sentiment survey moved back to Buy before Thanksgiving, could it be preparing a Bull trap and whipsaw action for next week?