- The Russell 2000 never made a new high on the recent rally.
- The financials are severely lagging.
- The overbought reading the market just registered was much weaker than previous ones. While a strong overbought reading is bearish in the short term , it is a sign of a market with strength. The weaker overbought reading we just had shows slowing momentum.
- The market has registered levels of call buying not seen in years.
Drowning Out The Noise
Good Morning. The market was down because of Dick Bove's downgrade. The market was down because of the Pay Czar. Blah blah blah. The fact is that two weeks ago an atomic bomb could have been dropped on the market and it still would have gone up. The market is simply overbought and in need of a correction. However, there were some internal divergences at the recent high that might be hinting at a bigger downdraft than what we have been seeing recently.