NEW YORK (TheStreet) -- The stock indexes started off the second quarter and the month of April on a losing note Wednesday.
One day after getting rocked to the downside to close the first quarter on Tuesday, the DJIA lost another 77.96 points on Wednesday to close at 17,698.18. The S&P 500 lost 8.20 to finish at 2,059.69. The Nasdaq was lower by 20.65 to close at 4,880.22 while the Russell 2000 lost 1.06 to finish at 1,251.70. All the indexes closed well off their day's low, however.
The S&P 500 index closed the first quarter of 2015 with an extraordinarily overbought algorithm number. That has only happened one other time in history. That time period was during the dot-com bust era when there were 12 consecutive quarters of an overbought signal.
Is this a coincidence or something more? Time will tell, but from a trading and investing standpoint, you need to take notice of the overbought signal and become more cautious going forward.
An overbought condition cannot last indefinitely. There will be a substantial correction over the next year or so.
As Thursday is the last trading day of the week as we approach the Easter holiday, trading volume should be relatively light.
A few stocks that will be oversold Thursday if they open to the downside are Best Buy(BBY) - Get Report, Biogen(BIIB) - Get Report, and ProShares Ultra DJ-UBS Natural Gas(BOIL) - Get Report. All three stocks should move higher over the next few trading days.
This article is commentary by an independent contributor. At the time of publication, the author held BOIL.