Dow & S&P 500 overbought....BUT

Here is a quick snapshot of indices and some sectors, they are giving conflicting reading, IF you believe strong sectors, then we are in trouble, BUT.....IF you look @ weak sectors, then it is a screaming buy....based on old lense....

Here is the story of RSI in select sectors / indices :

XLF         75.50

DOW       74.13

S&P 500  71.63



Nasdaq    57.31

RUT        55.81

SOX        40.15

As you can clearly see from the above sample, where it is overbought and where it is  " deep value " or maybe NOT...

Star of this rally was financials where MS GS BAC JPM WFC C have taken this sector into strongest performance in many years.

BUT.....SOX is where the  " deep value is " or is it ?

Nasdaq is definitely lagging considering AMZN GOOG  AAPL are heavy weighting.....

Nothing to worry here, but financials may be the story for next 5 years, like technology has been since bottom of 2009.....

For historical perspective S&P 500 was 666.79 in 2009, today it is 2651.56...a gain of 1984.77 or almost a gain of triple......

Gains in Nasdaq has been off the carts..looking @ 5 times in same period from bottom of 2009...

On a relative basis S&P 500 has more room to run....

We all are too used to technology stocks, which needs to change ASAP.....

Strong gets stronger like financials and weak gets weaker like SOX......

Next week market may gain more momentum on tax deal.....

Anyway......things are changing as illustrated above......

It is extremely prudent to have overweight exposure in financials.......

Good luck with your own evaluation of trend & comfort level.

BLOG does NOT give buy or sell.

Saleem

Posted in: Mixed