By Lawrence G. McMillan
The stock market refuses to back off. This is making TV commentators gleeful, but experienced traders are finding such one-sided action to be a bit dangerous.
By Lawrence G. McMillan
MORRISTOWN, N.J. (MarketWatch) — As much as I like the intermediate-term picture, where nearly all of our indicators remain bullish, the overbought condition that has been created is reaching the stage where – if it’s not alleviated soon – it could result in a gut-wrenching drop that can wreak havoc on portfolios and, more importantly, on psyches.
By Lawrence G. McMillan
The market continues to repeat itself with great frequency these days. Once again, early selling was reversed, and now the market is trading near its highs for the days. Breadth is only slightly positive (due to the weak opening), but even so the breadth oscillators are in deeply overbought territory. $VIX rose initially, but is now down slightly on the day as well.
By Lawrence G. McMillan
The market continues to rise, mostly in a very slow-motion fashion. Meanwhile, overbought conditions are building. $SPX has bumped up against the 1330 level for three days in six, without being able to break through. I would not expect any correction to violate that bullish trend line, but if it should happen, it would be a major negative factor.
Equity-only put-call ratios remain split. The standard ratio remains on the sell signal that was generated last week. But the weighted ratio remains on a buy signal.
By Lawrence G. McMillan
The stock market, as measured by the S&P 500 Index, has had an impressive year so far. A strong month of January wound up with the typical seasonal buy programs which have spilled over into February (as they often do).
But the overbought conditions have continued to grow, without being properly alleviated. Thus, the odds of a short-term correction are high, especially as January disappears in the rear view mirror.
By Lawrence G. McMillan
MORRISTOWN, N.J. (MarketWatch) — The bulls have been completely in charge. While there may be some short-term victories ahead for the bears, it appears the bulls are not finished yet.
By Lawrence G. McMillan
There have only been four down days in January, and as a result the market is very overbought. The intermediate-term indicators are mostly still positive at this time, although there is one glaring exception -- a new sell signal (just registered today) from the standard equity-only put-call ratio.
Other intermediate-term indicators remain positive, though. For example, $SPX is still clearly in an uptrend. However, if the 1260 level were breached, that would be much more bearish.
By Lawrence G. McMillan
An indicator that doesn’t get a lot of attention is how many stocks are above or below their moving averages. In this article, we’re going to take a look at that indicator, using several different moving averages. Clearly, such an indicator is just another way of discerning whether the market is overbought or oversold (or is not). Does this give a better or complementary picture to the indicators that we already use for these purposes, which largely are market breadth and put-call ratios?
By Lawrence G. McMillan
The stock market, as measured by the Standard & Poor’s 500 Index (SPX) has been struggling this week. It hasn’t been going down, but it’s been apparent that it was too overbought to go up much, either. Then today, Fed Chairman Bernanke announced the de facto beginning of QE 3, which propelled financial assets of all sorts (except the U.S. dollar) to rally. SPX moved 20 points off its lows; T-Bond futures soared more than two points, Gold rallied $60, and so forth. You get the idea.
By Lawrence G. McMillan
Friday was another boring market day, with $SPX in a 6-point range. The reality of the situation seems to have struck $VIX traders, though, as that index lost another 8% on Friday. The downward trend of $VIX is bullish for stocks, but this is beginning to look a big overdone. I would have to say that $VIX at 18 (and $VXO below 17) is certainly in overbought territory.
