Tiho Brkan | Nov 23, 2012 05:49AM ET
If you haven't heard the news already, the bulls have declared victory. Various bloggers around the internet have posted articles titled The bottom is in, Waiting for Santa Claus rally and Major buying opportunity (plus many others). The first note in Saturday's post warned that all in all, one could make an argument that a bounce or relief rally might be in store soon and that is what we have gotten so far. However, I'm personally not expecting anything remotely close to "a major buying opportunity... just yet. While there are many reasons for this, the chart above which tracks short term market breadth internals, shows that the market didn't really experience a proper oversold condition. We only became slightly oversold with Net New Highs, while the AD Line & Volume as well as the Stocks Above 50 MA never really washed out properly. Many will ask, why is it import to get oversold? Extreme oversold conditions create panic selling and re-build the wall of worry by removing weak hands from the market. These occurrences are necessary to forge longer term lasting supports as anything less usually fails.
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