Note the lack of divergence in RSI this time around, compared to late ’08 to early ’09 when CHF and EUR were preparing to rally (see my red arrows on the bottom of this chart).
This suggests that any rally that develops here (and I suspect that one will soon, since they are very oversold on several weeks of dismal trader sentiment) will not be as strong as what we saw in 2009, and that King Dollar is going to reign for a long time yet. Click the chart to enlarge:
I’ve circled the times we’ve seen a low RSI on the daily chart make a double dip into oversold territory. Each instance was followed by a rally, both in the bear phase of 2008 and the bull phase of 2009-2010:
Prophet Chart from Think or Swim
SPX futures are looking pretty oversold here, and you could say there’s a bit of negative divergence on the hourly:
The US markets are actually among the least oversold around the world. Japan, Australia, China and lots of Europe are down a lot more, which tells me there’s room for a corrective bounce here.
Here’s Australia’s main stock index, for example:
Of course, I think all stock indexes are going to make deep new secular lows in the not-so-distant future, and the land down under will finally be welcomed to the depression as its real estate bubble pops and commodities decline again.