NEW YORK (TheStreet) -- As Sir John Templeton once said, bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria.
We are getting to the eurphoric stage.
The four major stock indexes finished in the green on Tuesday, ahead of the Federal Reserve Open Market Committee announcement on Wednesday.
The DJIA finished higher by 27.48 points at 16808.49 while the S&P 500 was up 4.21 to close at 1941.99. The Nasdaq was higher by 16.13 at 4337.23 and the Russell 2000 was up 9.80 to close at 1176.62.
This was the third day in a row the up volume had no buying conviction behind it. The previous down day, on June 12, had in excess of 100 million shares traded in the S&P 500 Trust Series ETF (SPY).
Thus, the markets continue to be held up by the Federal Reserve and its policy statement Wednesday. It has become very unfortunate the stock market and the Federal Reserve are one and the same. I do not think the stock market was intended to be controlled by FED policy. Fundamental stock and technical analysis has taken a back seat.
The most extraordinarily overbought sector continues to be the semiconductor stocks. The Market Vectors Semiconductor ETF (SMH) has a 99.24 algorithm number. That is on the daily chart. Both the weekly and monthly algorithm numbers are also in overbought territory. That is also called froth and euphoria. These numbers can be found at www.strategicstocktrade.com.
The Russell 2000 index is now showing signs of overheating on the daily charts. This comes on the heels of Trend Bearish signal. The Russell 2000 is down almost 3% from its March 2014 highs.