NEW YORK (TheStreet) -- Federal Reserve Chair Janet Yellen created some nice volume in Tuesday trading with her semi-annual Humphrey-Hawkins testimony before Congress, although it was to the downside.
The DJIA was the only index to finish in the green, up 5.26 points to 17060.68. The S&P 500 was down 3.82 points at 1973.28 while the Nasdaq finished lower by 24 points to 4416.39. The Russell 2000 was down by 11.81 points tp 1153.81 and is now down 1% for the year to date.
The Russell 2000 index is not getting much attention these days because of the outperformance of the other three major indexes. However, the Russell is the growth index and is another reason for my "growth slowing" theme in 2014.
Once again gold was down big on Tuesday and the SPDR Gold Trust (GLD - Get Report) is now down 3.33% in two trading days. GLD is still not low enough for me to give it an oversold signal. If it's down in Wednesday trading GLD will then be in oversold territory.
The Nasdaq index did slip into oversold territory on Tuesday and, coupled with the Russell 2000 index, that is deep into oversold territory. We should see those indexes head higher in the near term.
After the market close, Intel (INTC - Get Report) reported earnings that beat estimates and the stock is higher in the after hours. That may just be what the doctor ordered for the Nasdaq and Russell 2000 to head higher from the oversold signal.
The one sector that continues to move lower is the oil sector. There are many oil stocks that are now in extreme oversold territory. I am looking for a move higher in many of those oil stocks going forward.
Remember, I only trade from the standpoint where I have the advantage. I am not a momentum player. So I only look to buy those stocks that are either extremely or extraordinarily oversold according to my algorithm process.
That process is taking me to the small- and large-caps sectors where oil and other stocks are in oversold abundance versus those stocks that are overbought.
Many news items have hit the wires after the market close that appear to be bullish for trading on Wednesday. That is a nice setup for the oversold number of stocks showing up on my scans.
As of the close of trading on Tuesday I added to my long position in Southwestern Energy (SWN - Get Report) and started a new long position in Penn West Petroleum (PWE). Both stocks are large caps with an extraordinarily oversold algorithm number. I also started a long position in First Solar FSLR. (FSLR - Get Report) has an extremely oversold algorithm number.
At the time of publication the author was long SWN, PWE, and FSLR.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.