MCO update - potential for a reversal?

The MCO a NYSE market breadth indicator is developing a short term reversal pattern which will lead to a rally relieving the current oversold condition. This rally could be quite sharp on the upside a bear market rally characteristic. I still see no compelling evidence that the NYSE has put in a bottom. Therefore I expect the rally to fail and the markets to retest this months lows again, probably around the end of the year. We are starting to enter the tax loss selling period which will put downward pressure on prices.

The markets remain highly volatile and dangerous, IRA investors should remain on the sidelines for the time being.

The MCO for 10/01/08 an annotated chart. Click to enlarge.