Short-Term Overbought Has Us Tiptoeing on Trades
We're watching for whether and when we should start selling some shares.
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Stocks are moving higher this morning, following better-than-feared retailer earnings and a modest down tick in the 10-year Treasury yield.
The S&P 500’s Relative Strength Index is still a ways away from being overbought (a reading >70). But both TheStreet Pro's technical analyst Helene Meisler and Bob Lang have flagged the market as overbought.
Meisler sees the market as short-term overbought and Lang agrees. This will have us continuing to watch positions that move deep into overbought territory. It will also keep us eyeing positions that have had meaningful runs of late or that are encroaching on our price targets. With the S&P up nearly 10% from its recent Aug. 5 low, some prudent selling of shares may be called for ahead of September, which is typically the worst month of the year for the market.
Finally, we should remind you that the Fed's meeting minutes come out later. We believe this will largely be a non-event, keeping the market’s focus on what Fed Chair Jerome Powell says Friday morning. Powell will likely acknowledge further progress on inflation and note that the economy is slowing. We do not anticipate any hawkish comments, but to the extent they are not as dovish as the market is hoping for, there could be some room for disappointment.
At the time of publication, the Pro Portfolio had no position in any security mentioned.
