According to our overbought/oversold indicator (a variant of RSI) the S&P 500 index is now most oversold since September 2001. Note that a 22% gain followed after the oversold conditions in 2001 before the bear market resumed.
Oversold conditions in the daily timeframe as of the close of Thursday, October 11, 2018, are shown in the chart below:
PAL OB/OS shows a reading of 18.27, the lowest since September 29, 2001 (enclosed in red rectangle.) A sharp rebound is possible but the dangers of a bear market cannot be ruled out, as it was the case in 2001.
One thing is certain: the period of low volatility is over for now.
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