Extremely Overbought

October 26, 2006 · Print This Article

The S&P has not seen overbought conditions this extreme in quite some time. Futhermore, the stochastics that we use are almost pegged which almost always signals a short-term reprieve. We have not seen our technicals move into this type of extreme territory in years. As we into a period of seasonal bullishness (beginning of the month/end of the month) I am a little hesitant to short here. Things could change, but I would want to see sustained weakness for longer than a few hours. I am more interested in the Nasdaq 100 and Russell 200 at this juncture because both are reaching an area of very strong resistance. I will be watching how these two indices perform over the coming days. If we see both indices struggle a trade could be in the cards. Until tomorrow. Have a great night!

RSI (5) for OCtober 26, 2006