From mid-morning just two weeks ago (October 9th) through
Tuesday’s close, the Standard & Poors 500 Index ($SPX) rose 115
points. That is impressive, but the advance has been so swift that
it has created a number of overbought conditions that are on the brink
of becoming sell signals.
$SPX has support at 1730 and 1700.
Equity-only put-call ratios have rolled over to buy signals.
Market breadth has been very strong, and both breadth indicators
are on buy signals. However, they are also in deeply overbought
Volatility indices ($VIX and $VXO) plunged from their highs of
two weeks ago. They are now so low that they can be considered
another overbought indicator for stocks.
In summary, the indicators are bullish for the intermediate term,
but the overbought condition of the market indicators means
that another short-lived pullback is likely.