fbpx Market becomes overbought in one day | Option Strategist
Home » Blog » 2011 » 12 » Market becomes overbought in one day
By Lawrence G. McMillan

The oversold conditions, coupled with some positive news out of Europe, created a buying vortex yesterday.  This was so strong, that it was (of course) a true "90% up day" in "stocks only" terms and a "90% up volume day" in NYSE terms.  So, while the rally was enjoyable, it has already created an overbought condition.

$SPX is now back almost completely in the center of the two competing trend lines.  A breakout will probably not occur until 2012.  The breadth oscillators rolled back over to buy signals with the strong breadth data from yesterday, as did the equity-only put-call ratios.

$VIX dropped sharply, although the futures did not.  So, once again we repeat that this is a negative warning, but not necessarily for the immediate future... 

To read Larry's full market commentary, subscribe to The Daily Strategist Newsletter.

 Sign up for The Daily Strategist Newsletter