An oversold market and strong seasonality.

I'll make this quick today.  I have been watching video from the destruction done by Hurricane Katrina and talking about our retirement seems trivial.  Unreal.  I hope all of you in that area were able to find your way to safety.

I sent out an email alert yesterday to let you know I went into stocks as a short term play.  As of this morning I am 70% S and 30% F fund.

The F fund had a big day yesterday as compared to the weakness in stocks, but today starts a strong period historically for stocks.  Combine that with the extreme short term oversold readings we are seeing in most indicators, and it was worth a play to me.  But you have to be willing to jump out at a moments notice.  Volume is light this week and things could remain volatile. 

As of now I plan to hold on until Friday but things could change.  The intermediate term indicators say we are not yet out of the water and even if we see a short term rally, the next several weeks are still susceptible to more weakness. 

I'll just post some charts to show you again what I am thinking.  Today is -3 on the chart below.  Friday will be -1.  That represents days prior to the Labor Day weekend.

Today is also the 23rd trading day in August...




Thursday and Friday are the 1st and 2nd trading days in September.


                        Charts provided courtesy of www.sentimentrader.com

So short term seasonality is very strong.  Next week is another story.

Along with seasonality, the 10-day ARMS index, the McClellan Oscillator, the Rydex Cash Flow Ratios, Odd Lot sales, the Stock/Bond ratio and others, are all giving short term buy signals.  I'll discuss some of them in more detail tomorrow.  Until then, don't blink.  Things could change pretty quickly if we get a snap back rally.

The overall attitude should still be vigilance.  But look for opportunities when they are presented.

That's all for today.  Currently 70% S and 30% F fund.  Thanks for reading.