The Advance Is Under Duress

This column was originally published on RealMoney on Dec. 1 at 7:38 a.m. EST. It's being republished as a bonus for TheStreet.com readers. For more information about subscribing to RealMoney, please click here.

Two days ago, in view of the oversold numbers we were seeing in the shorter-term indicators, it looked like we could see a rally develop, but probably a brief one.

The selling of the day before had erased most of the gains of the past month. That and the prior few days had inserted some quite bearish numbers into the Arms Index sequence, bringing about a sudden oversold condition. So the rally on Wednesday and the hesitant follow-through on Thursday were to be expected. But yesterday's tentative action was not particularly encouraging.

As seen on the chart below, the five-day is still quite overbought. But that is likely to change as unusually bearish numbers are offset in the next three days. The 10-day is still quite neutral. ...