May 13, 2021

By Nigam Arora & Dr. Natasha Arora

Oversold Bounce

Please click here for a chart of  Nasdaq 100 ETF (QQQ).

• The chart shows that coming into today RSI was very oversold.
• When RSI is this oversold, it is a good setup for a bounce.
• Economic data this morning was very negative for the stock market.
• All of the buying today is from the momo crowd.
• In spite of the bounce, smart money is not buying.
• The bounce should be used to properly align the portfolio with current market conditions.  Please see the protection bands, cash and hedge levels in today’s Morning Capsule.