• Stocks indexes oversold
• S&P erases gain for year
• Opportunity at hand

Stock indexes are reaching extreme oversold levels and will likely trade higher from the 12,800 DJI and the 1,400 S&P level.

As of tonight’s close, the S&P index is down for the year. The stock indexes are in a bull market correction and, while I expect a rally into the September 11th through 17th time period, I do not look for a final low until late October or early November.

According to H.S. Dent, www.hsdent.com, the current credit crisis differs from the 1998 experience. In 1998, stocks - based on the fed’s valuation model - were 20% overvalued, whereas today they are 32% undervalued. In 1998 we had a 19% drop in 45 days. It doesn’t seem likely that this correction will be as severe given the current valuation numbers.

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Posted by Michael Chapman at 2:51 PM PDT