NEW YORK (TheStreet) -- The stock indexes closed trading on a down note in Tuesday's trading after being higher for most of the trading day.

The DJIA closed lower by 5.43 points at 17,875.42 and the S&P 500 lost 4.29 to finish at 2,076.33. The Nasdaq lost 7.08 to close at 4,910.23 while the Russell 2000 lost 7.18 to close at 1,253.36.

Trading on Tuesday was very suspect from the start as the S&P 500 Trust Series ETF (SPY) - Get Report volume nearly set a new 2015 low in volume. When this occurs, liquidity always becomes an issue as the programmed hedge fund machines can move the market around in a volatile manner.

I will continue to stress the importance for traders and investors alike to have a risk management process. The stock market is extraordinarily overbought on a quarterly time frame. The Nasdaq appears to have an extraordinarily overbought signal that has never occurred before in history and the S&P 500 overbought signal has occurred only one other time.

As far as sectors are concerned, the oil sector is now overbought on a daily and weekly time frame. The S&P Goldman Sachs Crude Oil Trust ETN (OIL) - Get Report is one such example. Attached is a daily chart of the OIL that clearly shows an overbought signal within a bearish trend, a three-month or longer time frame.

There appear to be many other oil sector stocks that are in overbought territory that are in need of a selloff to lower levels. Another example is Chesapeake Energy (CHK) - Get Report, a large-cap stock, and Laredo Petroleum (LPI) - Get Report, a small-cap stock.

In sum, traders need to continue to be cautious and opportunistic. There are many warning signs that the markets seem to be at the end of the rainbow and not the beginning.

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This article is commentary by an independent contributor. At the time of publication, the author was short CHK.