Few overbought and mostly oversold in US stock market....

 US stock market is a tale of very few stocks which are valued in trillions, thus carrying highest % weighting in key indices.

Indices are making daily new all time highs as highlighted by every tabulation.

Majority of the stocks with very good fundamentals in key technology areas are pulling back below support levels.

This overwhelming disparity is rarely seen when index are making all time highs on a daily basis.

Here is a look @ RSI to get the real picture :

TAN         68.97

S&P 500 68.30

Nasdaq   67.45

DOW      65.93

SOX       57.83

IWM      57.43

XLE      40.99

One can clearly see that there is 2 well defined markets on the same day when few Indices are hitting all time highs while other related sectors like Semiconductors are correcting and below support. Russell 2000 is also struggling.

The above disparity means, that internally, we are correcting in many sectors as evident to everyone based on daily tally of positive / negative volume and advance / decline, also new 52 wk highs / lows ratio is @ the lowest level in months, not a robust picture.

In this type of environment where 5 stocks are roaring daily with new all time highs while others are testing or going below support, one can diversify better for opportunistic trades.

Internals do matter, either laggards catch up or high fliers come down.

I have a feeling in this situation, both will happen @ the same time, it will just reverse UP comes down and down stocks should go up.

SO...please do some analysis of your own and see where you find opportunities.

Good luck with your own analysis.

BLOG does NOT give buy or sell.

Saleem

Posted in: Mixed