Per what I call the 60min trading strategy, $SPX
went deep into oversold territory Friday, June 1st. Evidence for this oversold condition comes from the fact that the RSI
on the 60min chart has dropped below 30. In the past, including just a few days back and visible on the chart, when the RSI
on the 60min chart drops below 30 there have been upward reactions. Market breadth
indicators also dropped deep into oversold territory. As a result of this oversold situation, I expect the markets to bounce starting sometime Monday. This bounce could last several days, though I do think it is destined to fail, if it does in fact materialize.
I have taken on a small position in SSO
in anticipation of this bounce. However, I could be totally wrong about this expected bounce and could suffer a loss with this trade. Markets are clearly in a down trend and market dynamics now follow the pattern of selling the pops as opposed to buying the dips thus making this an extremely high risk trade.