Breaking News
Investing Pro 0

S&P 500 In Overbought Territory

By Michael KramerStock MarketsAug 15, 2022 08:48
uk.investing.com/analysis/sp-500-in-overbought-territory-200531484
S&P 500 In Overbought Territory
By Michael Kramer   |  Aug 15, 2022 08:48
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
 
CSCO
-2.21%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
AAPL
-4.42%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
NVDA
-4.59%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
VVIX
+6.69%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
BTC/USD
-2.30%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
US500
-2.46%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

Stocks rallied last Friday, with the S&P 500 finishing higher by 1.7% to close around 4,280. At this point, the index has risen into overbought territory with an RSI now 71 and at the upper end of its Bollinger band.

Additionally, there continues to be a rising wedge pattern in the index, but one that is a bit wider than how I initially drew it out. These things are formidable to gauge to something, and the rising wedge in the RSI seems to confirm that the rising wedge in the S&P 500 continues to exist.

S&P 500 Index, Daily Chart
S&P 500 Index, Daily Chart

Additionally, the index is now within 20 points of closing a gap from May 4. That gap could offer plenty of resistance should the index open higher today and push higher. Regardless, I still think we will likely see a significant pullback to the 3,950 region over the next couple of weeks. The 3950 would be around 61.8% retracement should we top out between 4,280 and 4,300.

S&P 500 Index, 1-Hr Chart
S&P 500 Index, 1-Hr Chart

VIX / VVIX

The VIX and VVIX divergence grows wider, and I am curious to see how much longer this plays out. There appears to be some normalization process, as the ratio of the VIX to VVIX is coming down quickly now, and appears to be on the path to return to the previous uptrend that had been placed. I think this “normalization” process should continue a bit more, but at the same time, I also think it is near its end.

VIX/VVIX Ratio Daily Chart
VIX/VVIX Ratio Daily Chart

Bitcoin

Bitcoin has managed to hold up much than I thought it might, but the outlook appears to be the same. A rising wedge pattern is forming within the bear flag pattern, strengthening the case for this fall lower and potential test 16,400.

BTC/USD Daily Chart
BTC/USD Daily Chart

Apple

Apple's (NASDAQ:AAPL) rally seems overdone. I’m happy to see it rise, as I have owned the stock for years. But it looks unrealistic, especially following an earnings report and guidance that didn’t appear to be among the company’s best. The shares are overbought with an RSI over 70 and approaching its upper Bollinger band. A fill of the gap back to $156 doesn’t seem that hard to believe to me.

Apple Inc, Daily Chart
Apple Inc, Daily Chart

NVIDIA

NVIDIA (NASDAQ:NVDA) gapped below an uptrend, and that is generally very bearish. At this point, it appears to be either revisiting the breakdown or attempting to fill the gap. Either way, the stock looks like it doesn’t have much upside left. The revenue shortfall was significant, and once unless it gives better than expected guidance when they report results, I don’t see how any rally is sustainable.

NVIDIA Daily Chart
NVIDIA Daily Chart

Cisco

Cisco (NASDAQ:CSCO) is in the process of filling a gap from May, and it would be disappointing for the stock not to fill that gap at $48.45, especially given how far it has come in recent weeks. They will report results this week, and those results will probably be a determining factor in what happens next.

Cisco Systems Daily Chart
Cisco Systems Daily Chart

Original Post

S&P 500 In Overbought Territory
 

Related Articles

Michael Kramer
Stocks Rally As Rates Plunge By Michael Kramer - Sep 29, 2022

Stocks jumped yesterday after the Bank of England noted it would help to stabilize the British bond market. Rates fell dramatically across the curve in the UK, resulting in rates...

David Madden
Is Apple turning sour? By David Madden - Sep 27, 2022

Apple’s (AAPL) share price rallied in late July as the third-quarter numbers topped forecasts, but the stock has been sliding since because of the wider sell off in the markets....

S&P 500 In Overbought Territory

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Ben Gal
BenG50 Aug 15, 2022 13:09
Saved. See Saved Items.
This comment has already been saved in your Saved Items
As always Michael, you are so bearish and yet i like your writing. Its seems like you hold shorts for how knows how many number of years. Glad, i am not always following you as i could miss the last really big time. Think positive mate.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email