Ch-Ch-Ch-Changes
“Time may change me, but I can’t trace time.”
When things get extreme on one end, it creates a vacuum at the other.
It’s like the last few weeks when everyone is buying stocks. No one wants them to go down or thinks they will, but inevitably one-way traffic leads to the opposite.
Stocks Are Signaling Changes
A few “strange” things happened on Friday that signaled changes.
The first was the red stick…in other words, sellers beat out buyers. This is new information when we are heavily overbought.
![](https://mapsignals.com/wp-content/uploads/2020/01/red-stick.png)
Then Monday came with an even larger red stick.
![](https://mapsignals.com/wp-content/uploads/2020/01/red-stick-2a-1024x605.png)
Next, we noticed that Tech stocks were extremely overbought.
The Big Money Sector Index shows a moving average of all Tech stocks seeing big buying. Historically, this doesn’t last long and a pullback shows up.
![](https://mapsignals.com/wp-content/uploads/2020/01/tech-buying-2.png)
This activity is very similar to Health Care a few weeks back. We discussed what a crest looks like:
![](https://mapsignals.com/wp-content/uploads/2020/01/health-care-buying.png)
Lastly, the Big Money Index is falling. We have learned you don’t want to fight that trend. On Friday we noticed it started falling.
![](https://mapsignals.com/wp-content/uploads/2020/01/big-money-index.png)
Bottom line – extremes happen and changes do, too. Pullbacks are necessary and healthy. This bull still has room to run long-term, but let’s make sure we aren’t living in a near-term vacuum.
“Turn and face the strange.”