How Overbought Are We?

by Ryan Mallory

The S&P is on a 13-day winning streak, everyone thinks the good times are here to stay. I was late to the bull party this year - what else is new!?! Anyways - I wanted to point out just how overbought this market has become by using the NYSI Advance/Decline reading with a stochastic overlay. Pretty soon here the crap will hit the fan and we are going to see a nasty sell-off.

As for today, I took 1/2 my position in BKS off the table for an 11.3% gain and will let the rest ride out. UGI is also doing fairly well, up today also but not quite ready to take any gains in that holding. I'm considering adding a new position in UUP, especially since it odesn't at all seem to be correlated inversely with the market like it use to.

As for the chart below, I found a disturbing bearish divergence on the RSI indicator on the top of the chart that as the S&P break out to fresh highs, the RSI is putting in a lower high. See for your self.

Here's the chart on the NYSI and the overbought nature on the market.