Dave and I mentioned some stocks that we both own in this market. It’s been over two months now that I posted an interview with Dave so I wanted to get his thoughts on what is happening in the markets for you.
Incredibly the Nasdaq is now just as overbought as it was oversold in December – actually more so if you judge by the RSI technical analysis indicator as you can see in this chart.
The RSI for the Nasdaq got over 70 before yesterday’s drop associated with Google’s earnings woes.
This is an extreme overbought reading for the Nasdaq, but does it matter?
Oversold readings tend to often lead to key bottoms, especially if they are associated with a panic washout and the VIX rising over 30, that can generate fast rallies, but tops don’t usually work that way.
The stock market though usually forms a top over weeks and often months before beginning a sustainable decline.
So this overbought reading isn’t really something to get too concerned about yet. If this is really a top the market will drift for awhile before falling for real.
And even if it is a top there are going to be stocks that just breakout and go up anyway and I think that the thing to do is focus on that.
This is why I mentioned ACB in a post Tuesday morning as a breakout candidate.
And it’s why Dave and I talked about several individual stocks that we own in this interview I did with him.
To listen to it go here: