By Lawrence G. McMillan
The oversold conditions, coupled with some positive news out of Europe, created a buying vortex yesterday. This was so strong, that it was (of course) a true "90% up day" in "stocks only" terms and a "90% up volume day" in NYSE terms. So, while the rally was enjoyable, it has already created an overbought condition.
$SPX is now back almost completely in the center of the two competing trend lines. A breakout will probably not occur until 2012. The breadth oscillators rolled back over to buy signals with the strong breadth data from yesterday, as did the equity-only put-call ratios.
$VIX dropped sharply, although the futures did not. So, once again we repeat that this is a negative warning, but not necessarily for the immediate future...
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