Not Much New

There is not much new to add this morning. The fact that the market is able to go sideways while working off its overbought reading is a positive for the bulls. There is still time for another pullback in the next few days while the market is overbought but it probably one that is worth buying.


PJ said...

Don't you think the market may be adding to its overbought status? Call buying has been high the last 3 days, unlike the earlier buying. A/D line almost steady on a 10-day average but at a new high as a 12-day average.

Seems like we may have to get past the European stress tests to get a read on the market.

Tsachy Mishal said...

We have essentially gone sideways for seven trading days. The S&P 500 closed at 1095 on July 13 and is at 1093 today. We are dropping 3 up days in the next 3 days and after that the market will have largely worked the overbought reading off.

The fact that the market has been able to hang in with the market overbought is a sign of strength. Sentiment does not seem to be an obstacle as the II survey shows as many bears and bulls, Rydex bears are at an extreme and hedge funds have de-risked.