NEW YORK (TheStreet) -- The stock indexes have successfully tested the bottom of their respective risk ranges on an intermediate term basis the past four trading days.
After losing 2.48% in value since March 23, the S&P 500 seems to be ready to finish the month of March and the first quarter of 2015 on an up note.
On Thursday, the DJIA was lower by 40.31 points to finish at 17,678 while the S&P lost 4.90 to close at 2,056. The Nasdaq lost 13.15 to finish at 4,863 while the Russell 2000 was lower by 1.86 to close at 1,231. All the indexes finished trading on Thursday well off the days lows.
The stock market needs to be approached with caution. There are multiple indicators that are signaling bumps in the road ahead. The DJIA and the S&P 500 indexes can close the first quarter in the green but the second quarter will show an extraordinarily overbought stock market.
Thus, prepare for the unexpected if you are a bull in this market.
Below is a chart of the S&P 500 index that clearly shows the top and bottom of the intermediate term risk range. Buying the low end of that risk range and selling the high end of the risk range is the suggested risk management process for traders.
One stock that is overbought and should move lower over the next few days is Qihoo 360 Technology (QIHU) .
This article is commentary by an independent contributor. At the time of publication, the author was short QIHU.