Zweig Breadth Thrust dropped down to 59.51 today and so this is now out of the overbought zone, though I don’t think it really matters all that much given that just about all the other breadth indicators that I follow ticked up today.
$NYHILO rose to 90.09 today. It’s probably got a little more room to go on the upside, but this is now flashing red flags.
$NYSI hit 1270 today and is pushing deeper into the land of overboughtness.
But here’s the bottom line: While the markets are overbought and getting more so by the day, the trend must be respected. Period. IMHO, this rally is running out of time but it clearly has not run out of time. The market could fool me, and it won’t be the first time, and continue on higher into 2013. Until there is some kind of clear signal that the market, try as it might, can not go higher, then longs remain in the driver’s seat.
Daily chart of $SPX showing a healthy index moving higher and higher. I expected a pause day today so the indecision doji should be no surprise. The most troubling thing I see on the chart is the RSI at 73. There are plenty of charting sites out there that would have the 70 line marked with “Sell,” if you catch my drift.
We’re going to need some time to see how the market’s overboughtness shakes out. In the meantime, be careful.
Zweig Breadth Thrust and 4wk New High/Low Ratio backed off a bit today to 58.67 & 89.02, respectively. This may buy the rally a couple more days but if we were to rally hard Thursday or Friday then these would push into extreme overbought levels and then you better start getting paranoid. But we are not there yet and may not get there this week.
Cumulative Volume Index rose today while the $NYA fell a few points in a sign of Positive Divergence. This doesn’t happen often and Positive Divergence is supposed to be a good thing, right? Yeah, well, the last time this happened was on October 28th, which was a Friday,when $NYA lost about 10pts. In the next session, Monday, October 31st, $SPX dropped 31pts. The difference between 10/28 and now is that the markets had gone into extreme overbought territory. Interesting that on 10/28 $SPX rose by 0.49pts and today $SPX rose by a whopping 0.40pts. OMG. (Theme from Twilight Zone should be running through your head about now.)
$SPX chart and still looks good. Holding above all key MA’s and trend lines and the 20MA is about to cross up through the 200MA. Dragonfly doji today but we saw one of those last week and it just indicated indecision. A close tomorrow below today’s low of 1285.41 would confirm bearish implications of this candle. But until then it’s just a candle.