Are we overbought ?

After every new all time highs, a natural question comes to mind, are we overbought ?

We need to look @ internals of the market to see where we are right now.

Here is the read on RSI in indices :

Nasdaq 64.90

S&P 500 67.04

Dow 69.43

Then we need to look @ sentiment, which is captured every week on Wednesday by AAII, please note that we closed @ new all time high in DOW & S&P 500 on Friday which is not reflected in these Wednesday numbers,

Bulls 54.6%

Bears 15.1%

I am sure everyone can see where we are in terms of bullishness....pretty high....

Another indicator which one can follow is Short interest ratio , currently it is @ the lowest level since December of 2013......

SO...all of the above is flashing warning sign for traders, they can flip to short selling or preferably Put buying to take advantage of "overbought condition"

Only hope is that we are @ the highest level in CMF reading , which currently @ .357 highest level since July 2014...means there is money flowing in into equities.

Another weak positive is that RUT & Nasdaq have gone sideways for last 6 trading days.....a basing period then we go higher?

All i can tell you that, be very selective in what you buy & when you buy.

Exposure needs to be looked @ based on your own comfort level.

TAPE is very tricky, it goes UP when nobody expects, and goes down when everyone is bullish.

Many stocks are basing for long time like GOOG, FB, PCLN and may be ripe for picking.

Good luck with your strategy.

BLOG does NOT give buy or sell.

Saleem