Charting the S&P 500: How Long Can an Overbought Condition Last?
It's been a while since the market was expecting a pullback. Is now the time?
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The stock market continues to forge ahead even with ripe conditions for a pullback in place. But as we know, the market does not accommodate anybody's time line, as overbought is simply a condition and not a signal.
Remember, signals are what we take while conditions are simply observed as we get ready for the signal. For all intents and purposes the stock market has been overbought for a few weeks as the bulls try to rally into the "safe zone" of that uptrend channel shown below.
It's going to be a difficult task, however, as the uptrend line continues to go higher and higher. Momentum, though, is on the side of the bulls as the stochastics remains strong as does the MACD (moving average convergence/divergence).
Even a brief 2-4% pullback would not be a surprise now but might actually give the bulls some much-needed energy to make a run at the old highs from February.
