If you look back 22 months, to July 2007, there have been 4 occasions where
the 30 day Relative Strength has been 58 or higher.
Those occasions are on the chart below.
Start at the left and observe the first three occasions where I drew the vertical
white lines with arrows.
What do you notice?
If you say that the market peaked at each of those occasions, you would be
correct.
So now, it is May 7th. and yesterday, the RSI closed at 60, the same level
as July 2007. The NYA (New York Stock Exchange Index) has been charging up
as if on steroids during the past few days. But still, it is now at an overbought
level where market peaks were found in the past few years. That sounds more
like caution is the prudent thing right now. Overbought conditions can often
last longer than some investors expect, but one thing is clear ... risks levels
are now elevated.
Marty Chenard is an Advanced Stock Market Technical Analyst that has developed
his own proprietary analytical tools and stock market models. As a result,
he was out of the market two weeks before the 1987 Crash in the most recent
Bear Market he faxed his Members in March 2000 telling them all to SELL. He
is an advanced technical analyst and not an investment advisor, nor a securities
broker.
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