Certain market indicators are at levels of extreme bullishness. The run up in value stocks since the US elections has been shocking. Now is a good time to lighten up on bullish bets.
The market had two positive days in a row. Even with an amazingly bad employment report this morning, the market trades higher today. Other indicators are improving elsewhere, and perhaps a stronger rally could occur.
Volatility in the US has exploded, throwing the markets into disarray. The intermediate-term trend is bearish, with extreme oversold conditions likely to produce sharp, but short-lived, rallies. We will look at some important indicators to see how oversold the markets are and what usually happens at times when markets sell off quickly.
We review common measures of volatility, breadth, volume and investor setiment to determine how much more of a pullback the US markets might witness.