Overbought Conditions

My Swing Trading Approach

I didn't add any new positions yesterday, and that may be the case again today until I can see what this market wants to do with overbought conditions (a rarity these days) and whether the market can consolidate some first. 

Indicators

  • Volatility Index (VIX) - Not falling like it was last week. A small drop of 4.3% yesterday, taking it back down to 20.47. Seems overdue for a bounce here. 
  • T2108 (% of stocks trading above their 40-day moving average): A healthy move of 27% that took the indicator back up to 38%. Stocks are recovering, but the question is for how long? 
  • Moving averages (SPX): No major changes on this front yesterday. Still looking for a possible test of the 50-day moving average.

Sectors to Watch Today

Real Estate led the way, while surprisingly, Discretionary is now trading above its 50-day moving average. Some signs that traders are starting to get back into the "safer" sectors with Utilities being near the top. 

My Market Sentiment

Overbought conditions are starting to emerge, and I am leery about adding new longs at this juncture. At some point, we'll start to see some profit taking, and a potential reverse back lower. 

S&P 500 Technical Analysis

(Click on image to enlarge)

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Current Stock Trading Portfolio Balance

  • 30% long.

Click here to download my Allocation Spreadsheet. Get all of my trades that I make real-time by jumping in the  more

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