NEW YORK (TheStreet) -- Thursday the stock market got even weaker, continuing its sell-off from Wednesday. The DJIA
The Nasdaq and Russell 2000 indices are both extremely oversold by internal indicators and could rebound to the upside at any time. The sell-off in the markets has shaken out the weak hands. This was long overdue, and necessary for the markets to move higher.
Many pundits are now saying that a market top has been reached. They're turning bearish. But that is a very premature statement to make. The S&P 500 index is down a whopping 2% from its all-time high. That is hardly a reason for bearishness. With such extreme oversold signals at hand, look for this market to rebound from this short-term correction and move higher over the next few trading days.
My internal indicators are finding a huge amount of both large-cap and small-cap stocks that are oversold. Large-cap stocks are those with a market cap in excess of $4 billion; small-caps fall below that cutoff.
One of those small-cap stocks that released earnings after the close of the market was Restoration Hardware (RH). This was a stock that we bought and sold earlier this week. Currently it is trading higher by 10% on those earnings. Another small-cap stock that we bought on Wednesday was Orbitz Worldwide (OWW). We sold that for a better-than-3% profit on Thursday, and bought it back again after it turned red on the day.