With the best gain in more than two months, the
S&P has staged an initial recovery off of a multi-month low. Historically,
that bodes well for the next few months, but more questionable activity in the
shorter-term.
Prior to the last year, we saw the percentage of
bearish (for the market) indicators reach 40% several times. In the past
year, it hasn't gotten much higher than 30%, each time coinciding with a period
when equities were about to flatten out for 1-3 weeks. We saw that again
on March 20th as that percentage reached 29% and stocks have consequently backed
off a bit.
We're seeing more sectors approach oversold
territory with the correction of the past couple of weeks, but they're not
moving as quickly as one would think. That's partly due to investors
hiding out in more-defensive sectors like Staples and Utilities, which aren't
anywhere near oversold yet. Some of the better bottoms of the past few
years have come when a broad cross-section of sectors hit oversold territory.