The market is 'vulnerable,' but here are 3 things that could signal the next rally

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Ed Clissold is looking at investment sentiment, overbought conditions and fourth-quarter earnings estimates. Here's why.

The market is "vulnerable," but three things could signal the next rally, according to one strategist.

"We'd like to see a little bit of a washout, and some of that just takes a little bit of time for people to digest information and to get a little more cautious," he toldSecondly, Clissold monitors how oversold the market gets. While Monday's sell-off took the Dow down over 750 points, the strategist says even more extreme oversold conditions could put the market back on track, especially given that stocks had looked overbought in the last few months.

"We'd like to see those estimates get lower before we'd feel comfortable that there's a little bit of a better fundamental underpinning to the market," he said.

 

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