Crazy rally today. Stocks are really overbought on a short term basis at the moment. I cover (WEEKLY) AMZN,NVDA,META,GOOG and other markets and stocks with this model, but today I wanted to have a quick look at the SPX and NDX DAILY indices, just to give you an idea of how the market currently looks like, from my perspective.
Let’s start with the SPX DAILY:
The following graph is a distribution graph for this DAILY trend pattern, showing all the events that ever happened in history when this pattern was encountered. As you can see the SPX is in the “tails” area on the price model (left hand side, below).
The time model (right hand side) is not overbought yet, the market could (theoretically) go higher 1-2 more days before it gets really oversold there too.
Here is the NDX DAILY:
and the NDX DAILY distribution graphs, what I said for the SPX is also observable here:
Summing up: given the volatility of the last few days, frankly anything can happen, a sharp pullback or a flat period to digest today’s move are both possible, valid scenarios. Also, some more rally on Thursday (spillover) is very likely.
Probably I would not go short immediately on Thursday, because the non-oversold time model is basically saying: 1 or 2 more days up are possible, although the actual upside in price terms should be somehow capped/limited, based on what we see on the models above.
I may be wrong, I just think the momentum of the rally that exploded on Wednesday is not over (yet).
