Oversold market

Last night, one of my indicators pointed to a higher open for today, I didn't know what caused smart money to buy aggressively. They have been wrong lately. But this morning I saw the headline -- takeover talk sends future higher. Remember, there is always something they know we don't know.

I started my search engine and generated the following picks:

AL
ALTR

They are fundamentally strong, one of them is oversold and a rebounce is due.

Have fun.

Mkt Swimmer

P.S.:

For reasoning behind, see the link:

Financial Sense

"ANATOMY OF A BOTTOM"
by Puru Saxena
Editor, Money Matters
August 22, 2007


After going through all the technical and sentiment data available, I am more convinced than ever that a major bottom was formed in the markets last week. Below I present the reasons –

a. Volatility Index (VIX) which measures market fear surged to 37 intra-day on Thursday before reversing and settling at 30. On Tuesday, it fell further to 28 - we may have seen the top in the VIX.

b. On Thursday, over 1,000 US stocks recorded fresh 52-week lows and only 10 stocks hit new highs - this extreme reading is a symptom of a severely oversold market

c. The Put/Call ratio, which measures the number of put options (bets on the market declining) versus call options (bets on the market rising) reached 1.3 which is even higher than the level recorded at the bear-market double bottom in October 2002 and March 2003. The current reading indicates that the majority of market participants are positioned for a further fall and not many are betting on a rise. Such a high level of bearishness is a great "bullish" contrarian signal.

d. The latest survey done by Investors Intelligence shows that the level of bullish advisers has shrunk to 43% from close to 60% which is consistent with previous market bottoms

e. The Bank Index in the US (a leading indicator) also bottomed last Thursday and has been leading the advance off the lows

f. The Fed cut the "Discount Rate" by 50% and this is a sign that it will probably cut its Fed Funds Rate at its next meeting. Rate cuts are bullish for assets and negative for the US Dollar.

g. Finally, Thursday marked a "key" day reversal. In other words, after being down significantly during the day on massive volume, US stocks managed to close higher representing panic and capitulation.

So, you have to ask yourself the following question:

If the capitulation has already taken place as evidenced by Thursday's data and the majority of market participants/advisers are now stark bearish, who is left to sell???