Investors who expect a market pullback and want to find potential short candidates could start with a list of the most overbought ETFs at the moment. Below is a list of key ETFs that are trading the furthest above their 50-day moving averages. As shown, the insurance ETF (KIE) is the furthest above its 50-day at 17.89%, followed by banking (KBE), Austria (EWO), homebuilders (XHB), and real estate (IYR). The majority of the most overbought ETFs are from the financial sector, and other countries that are overbought include Sweden (EWD), Australia (EWA), Belgium (EWK), the Netherlands (EWN), France (EWQ), Italy (EWI), Spain (EWP), and Europe as a whole.
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I agree that we are at LEAST going to pull back .....and perhaps resume the bear market.
-The Market PE is historically overvalued.
The Current PE is @ 17 on the S&P.
-The Stock Market is overbought when measured by the number of stocks above their 50 day moving average lines.
-Bullish Sentiment is high. The Daily Sentiment Index (DSI) hit 89%. This reading is the same as the Oct 2007 high.
-The American Association of Independent Investors, (AAII) registered 19% bears. This is the same reading as the all time high reading.
-The trading volume is poor. There is less volume on each push up.
Insiders are selling at 28 times the amount they are buying.
-September is traditionally a tough seasonal month. 17 out of the last 20 years have been down.
-Markets have rallied up over 50% off the bottom in 5 months. This is the farthest and fastest in history.
-The NASDAQ 100 has retraced over 50% of the decline off the all time highs.
The S&P Index has retraced 40% of the decline.
-The Aug 24th high was not confirmed by the 14 day RSI and MACD reading creating a divergence.
-The Shanghai index has dropped over 20% from the highs. This market bottomed before our markets and led the U.S rally up.
-25% of NYSE volume recently has been FNMA, Freddy Mac, and Citicorp, all low price stocks that the public buys. (speculation)
-The volatility Index (VIX) hit a new low on 8/25 confirming the bullish sentiment readings. This is a signal of NO fear in
Posted by: Charles Maley | September 01, 2009 at 11:02 AM