NEW YORK (TheStreet) -- Attention: Please be very careful when navigating around in this stock market. It is very treacherous right now and extreme caution is warranted.
The DJIA closed to the downside on Thursday, losing 21.97 points to 16558.87 and the S&P 500 closed down 0.27 points to 1883.68. The Nasdaq finished on the upside by 12.90 points to 4127.45 after being up more than 34 points early on. The Russell 2000 closed down 0.89 point at 1125.97.
As I mentioned in the Wednesday article, the DJIA and the S&P 500 were in overbought territory according to my proprietary algorithm process. The down day today did nothing to alleviate that overbought condition. I am still looking for that selloff to take place at anytime now. The selloff could very well have started today and we get a continuation on Friday. The DJIA and the S&P simply cannot continue to be in the current overbought condition.
On Thursday the Nasdaq showed signs of the hedge funds that were short technology stocks covering those positions by buying the tech sector. The old momentum stocks from Apple (APPL) to Facebook (FB) to Netflix (NFLX) carried the day higher for the Nasdaq.
If the Nasdaq should happen to open to the upside on Friday, that index will join the DJIA and the S&P in overbought territory.
That would leave only the Russell 2000 index as the only index that will not be overbought according to my internal numbers. The Russell 2000 has some serious issues, being Trend Bearish for a long while now.