Overbought

Bespoke Investment Group  published this piece yesterday on the market's being overbought:

"As shown in the first chart {above}, the S&P 500 is now trading two standard deviations above its 50-day moving average, putting it into extreme overbought territory. The index hasn't been this extended since last October. While the number of new 52-week highs expanded significantly today, the percentage of stocks in the S&P trading above their 50-days is only at 83%. Back in October when the index was as overbought as it is now, the percentage of stocks above their 50-days was in the 90s. Breadth still has some work to do."

Comment:  Markets can stay overbought and oversold for longer periods of time than most investors think.  I think the thing that we are perhaps overlooking is the money that is potentially shifting out of bonds into equities.  I also think the issue of low volume, not addressed here but something the chattering investment class has spilled a lot of ink over, is being masked by the amount of money that is going into ETFs instead of traditional equities.

*Long ETFs related to the S&P 500 in client and personal accounts.

Link:  S&P 500 Trading Range & Breadth Charts