Hangover or afterparty for stocks?
An array of technical factors show the market may be at the top end of its recent trading range, but strongly trending markets often produce false signals.
"There is no denying the fact that the market is overbought," said Paul Hickey, an analyst at Bespoke Investment Group in Harrison, New York. "The entire month of December the S&P 500 has closed in overbought levels everyday."
Hickey considers the S&P 500 overbought when it moves one standard deviation above its 50-day moving average. But looking at prior months where that has occurred he found performance the next month was above average instead of reverting to the mean.
"Momentum tends to carry the market further," he said.
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Update 2015/12/15
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