Okay, so now I’m pretty paranoid. More so than usual, if there is such a thing.
Hey. But maybe it’s nuttin’. let’s go through the numbers.
$NYUPV dropped from Friday’s reading of 1025 to today’s reading of 805. This is a sign of negative divergence and by itself I wouldn’t give it a second thought.
$NYDNV dropped to 116 today, when 150 indicates an overbought market.
$NYADV closed at 2516 today, when 2500 indicates overboughtness.
$NYAD, the daily reading, closed at 1997 today, when 1800 indicates overboughtness.
$TRIN closed at .67, which in the way olden days would have signaled an extremely overbought market and while it may not indicate that now it still indicates overboughtness.
$TICK closed at +631 which indicates a lot of buying/short covering at the close. Maybe a wee bit too much of both.
Zweig Breadth Thrust rose to 64.29 today which is the highest reading on ZBT since late June. ZBT rose to 62.21 on August 31st. That reading preceded a serious two-day decline. More on that in a minute.
4wk New High/Low Ratio hit 95.26 today, its highest reading since….wait for it…wait for it….late August. BTW, a reading of 95 for this ratio indicates extreme overboughtness.
$NYMO has pushed to within 16 ticks of its upper Bollinger Band. I like to see a tag but given the other readings, this could be close enough.
$NYSI added 91.33 ticks today. I look for climax buy or sell signals when $NYSI rises or falls by around 80 to 90 ticks. On August 30th, $NYSI rose by 79.83 ticks. On August 31st, $NYSI rose by 85.54 ticks.
And during the next two sessions, the $SPX gave back 45pts.
This chart of $NYSI looks good but it is also very extended above all the MA’s.
Chart courtesy of StockCharts.com
Add to all of the above the fact that the RSI’s on the 60min charts for IWM, DIA, and SPY closed above 70, which is just more evidence of an overbought market.
When you put all of this together it just points to an extremely overbought situation which needs to be resolved. With the $SPX up 10% for the month, is it too much to expect a little give back? Regardless of what happens in the next day or two, when ZBT and 4wk New High/Low Ratio hit extreme overbought levels, you better pay attention.
Only the paranoid survive, baby.