An Overbought Pause
Musing on the Markets

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Have You Seen This?

Have You Seen This?

As delightful as the rally has been, a key super short-term technical indicator, Slow Stochastics, is registering an overbought reading (above 80) and a cause for a pause.

As the accompanying chart* shows, while the near-term indicators, Momentum and MACD, are in fine shape (especially MACD) and supportive of further market strength, Slow Stochastics suggest that the market may have reached a near-term peak.

As was the case with the recent oversold levels and near unanimous non-confirmation readings, overbought readings are abundant (most indicators registering the same readings) and give further evidence of a peaking out in the rally.

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Posted 11-04-2008 8:05 AM by Vinny Catalano, CFA