S&P Stochastic Update
The stochastic oscillator has been our lead indicator on the S&P 500 daily chart. Its movement in and out of overbought and oversold conditions has signaled short term moves in the index. It dropped out of an overbought condition at the beginning of the month, and yesterday’s S&P close is once again testing the lower end of the trading channel it established earlier in the year. The oscillator is only at its midpoint and the assumption is the index has lower to go, which would most likely require a break of channel support.