The RSI on the 60min charts of SPY/$SPX, IWM, QQQ, DIA, $SOX, & XLF has pushed above 70 and in the case of SPY has pushed up to 76. This indicates heavy buying and/or short covering and is not sustainable so one has to expect some kind of pause or give back until the RSI for these cools off a bit.
$TRIN closed at .58 on Friday and so this is showing overbought, though not extremely overbought.
P/C Ratio dropped to .77 on Friday indicating that a huge percentage of market participants of betting on more upside, which they may not get short term.
$NYDNV closed at 124 of Friday, which just means that there was very little down volume and so this is showing extremely oversold.
$USHL5 added 338 issues on Friday pushing it up to 2238. Unless the markets fall off a cliff on Monday or Tuesday, then $USHL5 will push above 2500 early in the week which is this indicator’s overbought level.
Zweig Breadth Thrust pushed up to 63.94 on Friday and so this is showing extreme overboughtness.
4wk New High/Low Ratio has pushed to 94.50 when 95 marks extreme overboughtness. 94.50 is probably close enough.
$BPSPX has pushed up to 82, and it’s probably going higher. On the chart below I have marked zones where $BPSPX pushed above 85 and then peaked. If $BPSPX should rise above 85 next week, then you should look for a market pull back of one degree or another beginning at any time afterward.
Weekly chart of $NYSI showing that it has now pushed above the important 1200 level and so is now overbought. Nothing says $NYSI can’t go up to 1500, as it did in September of 09′. $NYSI reflects market strength, which is a good thing, but it can only go so far before it starts to roll over which indicates that buyers are shying away from higher prices and that those with long positions are locking in profits.
Charts courtesy of StockCharts.com
Weekly chart of $SPX and I just don’t see any red flags as $SPX continues to run on all cylinders.
There’s no question that the market is overbought in the short term so Monday may see a pause in the action, but this market clearly wants to go higher after that, IMHO. As far as I know, this rally may go on for several more weeks, though I find that unlikely. Just remember that as a market goes down, it is under accumulation and as a market goes up it is under distribution. As long as there are willing buyers, then sellers have no problem getting their price for shares they’re holding and the rally continues. But there always comes a time when buyers are all in and then they start looking around for other buyers and find none. When that happens then holders will just want to get out at any price and a decline gets under way. I don’t know when the current dynamic of ‘buy at any price’ will change to ‘get me out at any price’, but it’s out there. Lurking and mean.
I am holding a few remaining shares of UPRO and I don’t intend to sell these until trend lines start to break and the abyss is unavoidable. So even though I’m as paranoid as I ever am, I’m going to sit tight and let the markets show me the way.
GL in the week ahead.