Indices getting overbought.....

Indices are getting overbought, we had a very nice rally since start of the year, 5 straight week we have been UP UP & UP. 

Let us look @ RSI picture of various sector of this market, and they are :

Nasdaq          61.38

SOX               62.41

DOW             63.45

S&P 500       63.93

RUT             64.13

Most of the above have risen from below 30 near the end of the year, I have found RSI as a very good indicator of predicting " major turning point " and it gives me a clear signal that things are all set to reverse irrespective of bullish or bearish noise.

Obviously quick money has been made already, FDN Dow Internet index is UP 13.42% in January alone, that is well above historical average gain of 8% in a year

As this is the start of the month, there is a chance of money inflow which may push most indices into deeply overbought situation.

We are approaching or have reached major resistance of 200 DMA which needs to be monitored.

Technically speaking SOX is the most vulnerable.

Russell has lot of room from 200 DMA which is a good area to look.

DOW, S&P 500 & Nasdaq are all approaching 200 DMA a major resistance area.

Investor sentiment is getting euphoric based on Fed reversal, this aspect has been played out already and may be priced in.

China & US trade talks has a deadline of end of March, it is left to be seen IF enough progress is being made, @ the conclusion of each meeting there is carefully worded optimistic picture is given, but when they both reached their base, cautionary statement and highlighting differences emerges.

Bottom line is, it is better to wait out 2 weeks before putting new ideas to work generally speaking, it looks very " calm before pullbacks "

Some technician are of the opinion that, this a bear market rally and is ready for reversal.

Good luck with your own interpretation of this market and your comfort level.

BLOG does NOT give buy or sell.

Saleem

Posted in: Mixed