46 Days and Counting for the Market’s Overbought Conditions

Another week, another extension of a historic overbought period in the S&P 500.

Based on the closing performance of the stock market’s major indices, you probably would not guess that one of the stock market’s largest companies (Cisco) lost 16% on the day. If there was a day for the market to have an excuse to sell-off sharply, today was one of those days. However, the market fell far short of the big volume, big decline day that I keep awaiting before I get firmly bearish on the market’s stubborn overbought conditions.

My favorite oversold/overbought indicator did not even fall below its overbought threshold. T2108, the percentage of stocks below their respective 40-day moving averages (DMAs), continues to float above the 70% overbought threshold. The string of 46 straight days in overbought territory is the sixth longest streak since 1986.


T2108 still clings to (historic) overbought territory
T2108 still clings to (historic) overbought territory

*Chart created using TeleChart:

Be careful out there!

Full disclosure: long SSO puts

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