General Caution - RSI testing 50, prices testing 20sma on hourly

This Microsoft chart is similar to many others out there. On the 60min chart, price has come back up to test the 20sma, and this first touch since the downturn began usually brings in more sellers. The RSI is testing the 50 line on many stocks, so watch for it to go over or fail and turn back down. On my charts I use a 7-day and 14-day RSI because in strong trends the 7-day is more telling.

There was a sharp stochastic move up this morning, so it is possible that we see more selling this afternoon and/or tomorrow, and then maybe buyers step in near the retest of Tuesday's lows. Also Tuesday saw bearish engulfing candles on many stocks, which is another sign of caution. The low of Tuesday has to be breached for more downside confirmation.

In general many stocks look ripe for a bounce on the daily chart, yet weekly and monthly charts show there is more room to drop to revert to the mean (20 SMA).