August 22, 2017

Back near short-term overbought state with strong overhead resistance.

I often follow the RSI (2) to determine short-term overbought/oversold extremes. There is still a bit of room left until the major indices I follow reach an extreme, but it will not take much to enter into that area. Tomorrow brings the highly anticipated jobs report so a positive report should certainly push the market into the aforementioned area. A higher open will also create a gap higher which would be another short-term bearish sign.

As I stated earlier the Nasdaq 100 (QQQQ) and S&P 500 (SPY) are a bit stretched at this point so my hope is to see a positive open to fade tomorrow. Will we get it? Who knows, but that is certainly my hope for a high probability set-up. If we don’t get that then I will be sitting on th sidelines once again to see how the market plays out. I want to see extremes!!! We get near it and then the market fades before the extreme officially hits. Hopefully, the situation I mentioned will come to fruition tomorrow.

Overbought/Oversold for January 31, 2008 

S&P (SPY) – 62.6 (neutral)

Russell 2000 (IWM) – 66.0 (neutral)

Dow (DIA) – 66.4 (neutral)

Nasdaq 100 (QQQQ) – 55.4 (neutral) 

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