Chart of the Week: Short-term Pressure Factor

Tuesday, August 17, 2004 | 11:09 AM

Investech Research notes that their Pressure Factor, a proprietary indicator of oversold reading, has fallen to a minus 111. This is the 4th most oversold level in 35 years; The 3rd reading came just before March 2003 market bottom.

Short-term Pressure Factor
click for larger chart
Source: Investech Research

Jim Stack notes: “Each of these three previous extremes saw sizable market gains in the months that followed. So this would suggest a high probability of a pre-election rally rather than a bull market post-mortem.” The caveat to this is that where an oversold extreme leads to a short-term bottom, it typically takes several weeks after this extreme. “Don’t be surprised by more fitful, frustrating and fearful days in the meantime.”

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Quote of the Day:
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