BUYING LOWER

Major market futures are trading above fair value this morning and the market is still in oversold territory on the heels of the BSC/GS sub prime mortgage issues.

One market timing method explained in a recent TradingMarkets.com article features the TRIN. The TRIN is a mathematical formula devised many years ago by Dick Arms, a columnist at realmoney.com, that compares volume with advancing and declining stocks. The trading methodology is to buy the market when the TRIN closes above 1.0 three days in a row and the market trades above its 200 day SMA.

Currently, the markets are above the 200 day SMA but the SPX has sunk below its 50 day SMA. The TRIN closed at .50 off the rally last Thursday but has closed above 1.0 on 5 of the last 6 trading days and the VIX/VXO/VXD triad trade on average about 15% above their respective 10 day SMA's and the 2 day RSI levels on the major indexes is at/near the 15 level with the RUT at 10. My moving average tables of the ADV/DEC lines are also deep into oversold territory and usually when signals line up and its hard to buy its time to buy.