Nasdaq Composite Points to Overbought Condition for the Market
It's another reason for us to maintain our market hedging positions for the near term.
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Searching for Panic Inside an Overbought, Complacent Market
In our opening comments on Wednesday morning, we mentioned that, per some metrics, the stock market had become overbought.
One of those was highlighted by TheStreet Pro’s Doug Kass early in the morning when he pointed out that the S&P Short Range Oscillator reached 8.39%, signaling a deep overbought condition. To that we can add Wednesday's roughly 1% gain in the Nasdaq Composite, as it pushed its relative strength index (RSI) level to over 70, something we can see in the chart below.
While the S&P 500’s RSI level isn’t yet flashing an overbought condition, with a reading above 68, it isn’t all that far off either.
Let’s remember that, just because an RSI reading move over 70, it doesn’t mean the underlying index, ETF or individual stock can’t move higher in the short-term.
When it comes to a stock market index, like the Nasdaq or the S&P 500, however, we will want to tread carefully given the greater risk of a market pullback. While our inverse ETFs have been a drag on the Portfolio so far in April, what we see developing in the market means we’ll keep those positions in play to help insulate the Portfolio from a potential market pullback as the Q1 2026 earnings season heats up.
Related: How the Evergrande Founder's $42 Billion Fortune Became a Guilty Plea
