Many are talking today about the great recent steady run we've had in the markets. I recently wrote about the 9-day up streak in the Russell 2000 (RUT) (IWM) and how this bodes well historically for the following 2 weeks.
The media is abuzz about how 20% of the S&P 500 (SPX) (SPY) is making new 52 week highs ... but to me this is more of a calendar function due to the fact that we hit massive multi-year lows last March (the infamous 666 low on the SPX that I've written previously about). They've mentioned that this is the highest number since 1998 -- the key there is whether or not this occurred AFTER the 1998 market correction (which was a currency related worldwide correction) -- because after that market correction we had a massive runup in 1999 and 2000.
And my colleague Bob Lang pointed out this morning that Fred Goodman from MarketMonograph wrote:
"The S&P 500 14-day Relative Strength Indicator (RSI) made an all-time record high today when it reached 99.3%. It will stay at this level for a week if the market remains unchanged, but any decline will sharply affect its level. For example, a couple of five-point declines will send the RSI back to 82%.
The media is abuzz about how 20% of the S&P 500 (SPX) (SPY) is making new 52 week highs ... but to me this is more of a calendar function due to the fact that we hit massive multi-year lows last March (the infamous 666 low on the SPX that I've written previously about). They've mentioned that this is the highest number since 1998 -- the key there is whether or not this occurred AFTER the 1998 market correction (which was a currency related worldwide correction) -- because after that market correction we had a massive runup in 1999 and 2000.
And my colleague Bob Lang pointed out this morning that Fred Goodman from MarketMonograph wrote:
"The S&P 500 14-day Relative Strength Indicator (RSI) made an all-time record high today when it reached 99.3%. It will stay at this level for a week if the market remains unchanged, but any decline will sharply affect its level. For example, a couple of five-point declines will send the RSI back to 82%.
This high reading occurred because the S&P closed up on 12 of the last 14 days, and the two declines were just 0.20 and 0.25 points. Quite an unusual win streak and one that suggests the market will be higher a month from today."
So we've had this very unusual run in the markets and many are saying we are "overbought" -- certainly we are, according to many oscillators -- but that doesn't mean we can't get more overbought. In fact, many are waiting on healthy pullbacks to buy this market, which is making the pullbacks very shallow or not occurring at all.
Bottom line to me is, don't fight the tape and don't short an upward trend.
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