Nearing Overbought

The market will be overbought at the end of the day tomorrow. It is possible it will take until Wednesday of next week before we get maximum overbought. But the strong tailwind of the oversold reading from from early last week is clearly ending tomorrow.

Given the seasonality I am inclined to give the market the benefit of the doubt for as long as possible. This is proving difficult because the market has gone straight up. Typically when a market goes from oversold to overbought there is a dip somewhere in between but we have not seen one.

If we were to rally through tomorrow I would be inclined to reduce positions. However, if we were to see a pullback I would be more inclined to give the market until the middle of next week.

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