SPX - Overbought Conditions Persist

SmartReversals
06-14

$S&P 500(.SPX)$ Prices can remain overbought for extended periods relative to oscillators like RSI and Stochastic. These indicators can stay above 70 and 80, respectively, for a long time. However, such extended overbought readings based on Bollinger Bands are even less common.

Respect the Trend, But Be Aware

It's wise to follow the trend, key Supports were not broken for SPX nor NDX. However, be mindful that this is the second bearish candle in a row, specifically a hanging man pattern and again above the higher band.

There is an indicator that you can use to backtest the Bollinger Bands, it's %B, it measures the closing price's relative position within the Bollinger Band channel. A value of 1 or above indicates overbought conditions.

The most recent event is highlighted, it's time for a healthy pullback or flat consolidation.

I say few events since 2013, if the market does not pullback tomorrow, I'll share a special study.

$SPDR S&P 500 ETF Trust(SPY)$ $E-mini S&P 500 - main 2406(ESmain)$ $Invesco QQQ(QQQ)$ $E-mini Nasdaq 100 - main 2406(NQmain)$

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