Market timer Tom McClellan, publisher of the McClellan Market Report, said he will change back to short-term bullish on the stock market for the first time in nearly four weeks, has he sees a “panicked and oversold condition worthy of a very temporary bounce.” S&P 500 futures rose 0.3% early Friday, after being down as much as 0.7% earlier. He had changed to short-term bearish from bullish on Feb. 28, and then to neutral on March 20. McClellan will maintain his long-term bearish stance, which he’s had since Feb. 28. Among the technical signals McClellan mentioned for his oversold view are a “rainbow convergence” of four indicators which usually leads to pause, a high reading in the volume-weighted breadth measure the Arms Index and the wide spread between the spot VIX index and VIX futures. “Given this oversold condition, and all of the worries that traders are experiencing, I figure we can get an oversold bottom opportunity on Friday, and a bounce back upward as cooler heads prevail,” McClellan wrote in a note to clients. The S&P 500 tumbled 2.5% on Thursday, and has lost 3.8% since Feb. 27.
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