Oversold Hard Sell

For the words of the prophets were written on the studio wall
Concert hall
And echoes with the sounds of salemen
Of salesmen, of salesmen
--Rush

Domestic markets have been weakened by the ongoing saga that is the EU. On each of the first three days this weak, markets were off more than a percent in the mornings followed by brave face ramps that cut the losses by day's end.

Today we're seeing a 'relief rally' of sorts to take some pressure off 6-7 consecutive days of negative closes. Many are calling the markets oversold, but that condition exists only when viewing the tape with a short horizon.

On a weekly basis (above), stochastics have just started lower after twisting high for months. Support at SPX 1360ish has yet to be decisively pierced.

If that level breaks, then more downside seems in the offing.

position in SPX