A week ago last Thursday, I posted that things were a bit overdone on the upside and there could be a pause. At that point, the percentage of stocks that were overbought in the OEX and NDX were in the mid-70's range. That number has dropped to 29% and 26% for the OEX and NDX, respectively. In other words, the market has already worked off the overbought condition.
In addition, the percentage of stocks oversold in both indices is roughly the same percentage as overbought. If you remember, a week ago last Thursday, there were ZERO stocks oversold in the NDX, which had only happened once before in the last few years - after the surge off March low. The subsequent correction was about 5% before the next leg higher. This time, the NDX fell back 4% right away and is bouncing.
I am not suggesting the market is oversold by any measure...just that the argument that it is overbought is no longer valid when looking "underneath the hood" of the major market indices.
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