Markets are overbought – unusual buying reaches unsustainable levels
Well, that was fast! On Christmas Eve we were oversold and here we are just 6 weeks later, and we hit overbought today! The last time the ratio went above 80% (overbought) was 1/24/18 (you can read that blog post here). Markets dropped sharply immediately after that.
Simply put, unusual buying in stocks relative to selling is unsustainable at this level. Once our ratio starts falling, we expect a market pullback. We are long-term bulls; pullbacks are great buying opportunities for outlier stocks.
More details to follow in Sunday’s issue of the MAP View for subscribers.
