We use numerous indicators to guide us on the strength and weakness of the stock market in terms of when to buy, sold and hold. One of the important short-term indicators we follow is the 14-day S&P 500 Relative Strength index (RSI) which shows us the percentage of stocks that are overbought or oversold in the S&P 500.
When the S&P 500 RSI is above 70% that tells us the stock market is overbought. Meanwhile, 30% and below tells us that the market is oversold. That generally indicates buying opportunities. The chart below shows us that the S&P 500 RSI is not only over 70 but is at its most overbought level ever. That is an indication to be very careful. Certainly for the short-term.
Originally Posted on June 9, 2020 – S&P 500 Relative Strength Stock Market Index is Most Overbought Ever: Be careful!
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