Market Direction Is Extremely Overbought – Nothing New

Market Direction comments for today can only point out the obvious. This stock market is so overbought it is screaming. The pressure for a pullback has mounted daily but each little pullback has done nothing to reduce the extreme overbought condition the stock market is in.

Volume is incredibly low as the summer draws to a close. The light volume makes movements in the stock market more extreme. Today’s housing news buoyed investors and got them back pushing the market direction back higher.

Market Direction Indicators

The market direction indicators for August 16 are extremely overbought.

Momentum is back climbing again as is MACD.

The Ultimate Oscillator is now in extreme overbought territory after today’s push higher.

Rate Of Change indicator is falling which is worrisome to those who are long this market, but that could change on a dime in this low volume environment.

The Slow Stochastic is extremely oversold and continues to flash a bearish signal.

The Fast Stochastic however is extremely oversold but indicates there is still room to climb, but not much further.

Market Direction indicators for August 16 2012

Market Direction Outlook for Friday Options Expiration

There isn’t much to say tonight after today’s market activity. The stock market is extremely overbought and needs to pull back and consolidate. It is pushing into heavier resistance as the market direction continues up. Overbought conditions, just like oversold conditions, can last a long time, but with both slow stochastic flashing extreme overbought and fast stochastic at 97.81% there isn’t much more room for the stock market to climb, but it could try to push sideways to work off some of the overbought condition before moving higher.

Remember a thinly traded market can surprise investors with market direction, either up or down. Friday should be interesting to watch.