As the Stock Market Soars, the Bears Continue to Be Frustrated
NEW YORK (TheStreet) -- The beat goes on. The markets all finished higher once again Monday as the S&P 500 sets another all-time high.
The S&P finished up 1.83 points at 1951.27 while the DJIA added 18.82 to close at 16943.10. The Nasdaq closed up 14.84 at 4336.24 while the Russell 2000 was higher by 10.67 to close at 1175.88.
The Russell 2000 index has now joined the other three major indexes in turning "Trend Bullish." It was the last holdout according to my three-month-or-longer time frame. With that being said, the Russell 2000 index is now up a whopping .007% year to date. The Nasdaq is now up 3.8% year to date while the DJIA is up 2.2% year to date. The S&P 500 is the big winner up 5.5% year to date.
So the question now is, where do we go from here? All that I can say is that this market is now extremely overbought. The DJIA, Nasdaq, and S&P are all extremely overbought according to my algorithm process and the Russell 2000 in overbought.
If we have a green, up open on Tuesday, the S&P will be extraordinarily overbought. That has not happened since Jan. 25, 2013, according to my internal numbers.Whether we attribute this market move to the short hedge funds that are still covering their short S&P positions of the last two years or some other phenomena, this is no time to be chasing and buying at these levels. In addition, the CBOE Market Volatility Index (VIX.X) officially crashed last week, down 5.7% to -21.6% year to date. That is something to stand up and notice. If you want to really blow up as a trader in this business or money manager, get your clients to lever up long the U.S. stock market at a 10 handle in the VIX. As I have been constantly writing, the volume, or lack thereof, in this stock market, Friday saw total U.S. Equity Market Volume down 32% versus its three-month average. Today will be no better as the S&P 500 Trust Series ETF (SPY) volume was near the yearly lows at 65 million shares. The yearly low was a little over 61 million shares. So I will continue to be very cautious in my trading. I cannot find any large- or small-cap stock that has an extremely oversold algorithm number. All that I am finding are extreme overbought conditions.
To put that in perspective, I have "0" stocks on my large-cap extreme oversold scan while having 111 large cap stocks on extreme overbought signals. I go where my algorithm numbers take me. I do not prefer to short stocks, but the numbers guide me. A more detailed explanation can be found at www.strategicstocktrades.com. At the close on Monday I continued to add to my Direxion Daily Semiconductor 3 (SOXS) long position. I also added to my Broadcom (BRCM) short and added a new short position in Madison Square Garden (MSG). Both stocks have extraordinarily overbought numbers at 100. At the time of publication the author was long SOXS and short BRCM and MSG.. This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff. >>Read more: Zynga Is Still a Buy No Matter What Other Investors Think
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