During the month of September the market became overbought and never pulled back much. The reason I believe the market was able to do so was that market participants were "de-risked" at the end of August as pessimism was extreme. That gave participants a lot of room to buy.
Over the month of September sentiment has normalized and it stands to reason that equity allocations are higher as the chatter is growing louder that the market is a win/win. One can even make a case that short term sentiment has turned too bullish. Now that equity allocations are at normal levels, I believe that we will see more two way action. That means I will look to sell when we are overbought and look to buy when we are oversold.
We have gone sideways for the past two weeks making us neither overbought nor oversold at the current juncture. I am waiting for the bulls or bears to push things too far before making any strong directional bets.