Stocks Jumped On November 27, But Now More Overextended

Stocks rose on November 27, but it was a half-day session, and not much was really happening. The S&P 500, for now, remains in the same trading range established following the Pfizer vaccine.

The monthly chart seems to offer a unique perspective because the index has a declining RSI and volume. Meanwhile, the index has now traded out of its upper Bollinger band four months in a row. That hasn’t happened very often recently.

Additionally, it is even more glaring when you look at the chart for the NASDAQ 100. Where we see the same type of movement above their Bollinger bands. Again, I went through this in great detail in a video. (premium video – Stocks Still Look Toppy)

But the two charts appear to suggest that both indexes suggest the two indexes are in overbought territory.

Meanwhile, the VIX is very close to filling the gap at 18.5, currently falling to around 19.5 today. This unwind in volatility has been a powerful force to the rally, providing a massive tail. It should be interesting to see how the market trades with the VIX back at these lower levels.

Zoom 

Zoom (ZM) decided to work towards filling the gap, and that gap is now nearly filled. At $481, the gap will be filled, and it should result in the stock reversing and continuing its move lower.

Roku 

Roku (ROKU) is stalling out around resistance at the uptrend, and with falling volume and divergent RSI, don’t be surprised to see this move lower towards $225.  (Free content – Roku’s Stock Is Another Insanely Valued Stock)

PayPal 

Finally, PayPal (PYPL) is stuck around $214, and I think it will revert the other towards $175.

Disclosure: Mott Capital Management, LLC is a registered investment adviser. Information ...

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