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Short-Term Market Top?

 
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PostPosted: Fri Nov 28, 2008 5:48 pm    Post subject: Short-Term Market Top? Reply with quote

Normally, when NYMO is above 50, SPX is severely overbought, and when NYMO is below negative 50, SPX is severely oversold. However, NYMO has reached more extreme levels recently.

NYMO fell to negative 130 in October, then rose to 100 within a month, and then fell to negative 100, before the five-day rally began a week ago. Over the past five days, NYMO rose at a steep rate, to about 75.

Consequently, although SPX may rise to roughly 915 early next week (closed at 896), it may pullback towards 850 within two weeks, given NYMO's overbought condition. If a bear market rally is underway, then the pullback is a buy.

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