Last Monday the market corrected almost 200 points. This email is being written a week later, and I'll let you draw your conclusions on what the market has done. The facts of the week are all in.
That same Monday I received identification from a prestigious technician and stock charter as follows:
"-Overbought S&P 500 backs down from 1000 barrier. 1000 retested the November peak, and by moving to top resistance at 1014, the S&P actually had retraced Fib 38% of the entire 2007/2009 bear market.
-The RSI line was dropping for a test of its 50 line
-MACD signals were all turning negative
-A short term pullback could find support at S&P500 950, and a more serious pullback could reach the July low, that would represent a 38% retracement of the five month average. It would also provide a test of the rising 200 day average which should provide support."
For four weeks, during the last euphoric run up, Floyd has been referring to the bullish percent index for stocks, and for indices, being too high. Anything over 70 in the bullish percent index shows overbought. The chart above shows how the bullish index looks for the OEX on 8/18.
Run a comparison now. Learn to use bullish percent indicators for the simple "no noise" charting that they can provide.
All the noise we may need in the world, RSI, MACD, oscillators, moving averages, head and shoulders formation, still comes down to supply and demand, and cause and effect.
