In focus: Overbought, but still rising

By Lawrence G. McMillan

The stock market, as measured by the Standard and Poor’s 500 Index continues to rise (albeit very slowly of late). Even though the rise is slow, the fact that there has not been a correction in some time has led to some overbought conditions. SPX has not had a significant down day since Aug. 2. Thus, the odds of an overbought-induced short-term correction have increased.

The S&P 500 chart is bullish in that it remains in the upward-trending channel that we have been describing for some time now. However, SPX has reached the upper levels of the band, and that is an overbought condition of sorts. The lower end of the band is near SPX 1,360. A close below there would be a bearish development, but we are not looking for that much of an overbought correction...

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