The Market is Tired and Overbought, But Still Bullish

By Lawrence G. McMillan

The market is tired and overbought, but even so it managed to claw its was back yesterday afternoon, reducing the losses to mere fractions. As a result, the indicators closed in their previous bullish states. However, today there is some selling. Ostensibly this is because of a negative World Bank growth forecast. But in reality, plenty of people see the overbought condition and are looking for an excuse to sell. We would rather wait for actual sell signals.

$SPX has support at 1900, so any correction would probably be limited to that level. Although the “target” for the mBB sell signal would be the lower –4 sigma Band, and that is currently at 1878 and rising at the rate of 3 or 4 points per day. It might actually be near 1900 by the time $SPX fell to that level...

This commentary was excerpted from this morning's edition of The Daily Strategist newsletter.