The markets have been roaring. Yesterday, the Dow Jones Industrial Average set another all-time closing high, gaining 143 points to close at 20,412.  The S&P 500 gained 12 points and finished at 2,328.  The Nasdaq Composite was higher by 30 points to close at 5,764 and the Russell 2000 was higher by 3.5 points to close at 1,392. The three major indexes are up 15 basis points today, with Apple (AAPL) hitting an all-time high. 

     With the markets getting long in the tooth, when will this equity market take a breather?

     Perhaps we can shed some light on the disconnect between perception and reality.

     The perception is that the market will continue to move higher, because there is nothing to stop it.  Any type of bad news is being shrugged off as not important.  The bull market will continue higher until it doesn't.

     Well, the reality is that the stock market, especially the equity indexes, are near extreme overbought on all time durations - Daily, Weekly, Monthly, and Yearly.  This phenomenon has not occurred throughout history very often.

     It is true that the markets have never been controlled by the hedge fund community and the algorithm trading systems throughout history the way they are today.

     However, overbought is overbought no matter who is in control on the trading - human beings or machines.

     As mentioned numerous times in the past, the S&P 500 Trust Series ETF (SPY) volume very infrequently trades over 100 million shares in today's market.

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