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  • The percentage of NASDAQ 100 stocks that are overbought is 72% as of Friday's close. That has happened 11 times since May 2001. It makes sense the reading is high and suggesting a decline, but the results are mixed with a slight skew to the positive when the reading gets over 70%. On only two instances was a >70% reading a sign of a major decline coming and even then it didn't happen right away.
  • Despite the rally, only 35% of the OEX is in overbought territory (Friday's close) - not exactly a sign of extension.
  • This advance is generally orderly. If you don't believe me go through the S&P 500 stock by stock and see for yourself. While there are stocks up on a spike, most are not and have well defined near-term uptrends or have broken above well defined bases. As for the weekly picture...not much changed there and would be considered neutral at best.
  • I would not just buy stocks because the market is running...I would look for stocks that are within a small percentage of a breakout price, are in an uptrend, are oversold near a support level and have positive volume trends. I would avoid chasing stocks for the sole reason of being worried that you are "missing out." Following that thought generally doesn't end pretty.
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No positions in stocks mentioned.
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