Market Getting Overbought By Dick Arms About this article: Pay particular attention to the second chart, below. Two weeks ago, the shorter-term Arms Index moving averages were very oversold, prompting the suggestion that aggressive traders could do some buying. Now, however, the oversold has been entirely eliminated by the rally, and we are now looking at an overbought situation on the five-day and a somewhat overbought on the 10-day. That is telling us we are at, or nearing, a time when we should be closing out the longs, and even going short. The rally of the last few trading days was enough to put the Dow through its prior highs, but so far that is not the case with either the S&P 500, shown below, or the Nasdaq. That makes the Dow breakout look less convincing. In addition, the volume on the big up days has been disappointingly light. Yesterday's many small up and down... Or, call us at 1-866-321-TSCM (8726) Monday-Friday, 8 a.m.-6 p.m. ET. Outside the U.S. and in Canada, call 1-212-321-5200.

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