Value Line’s gradual lift shows why worry about SPX being overbought or overvalued is likely misplaced Array ( [cookie] => 031014E7-326D-42F5-9753-B7FFB2A8A09C [current_usage] => 2 [max_usage] => 2 [current_usage_crypto] => 1 [max_usage_crypto] => 1 [lock] => 1 [message] => [error] => [active_member] => 1 [subscriber] => 0 [role] => fsi_pro [visitor_id] => 593118 [reason] => [method] => ) 1
ATTENTION: As I am out of town, I will unfortunately not be able to write a technical report Thursday (3/14) or Friday (3/15) this week.
I continue to see the US stock market as being attractive, technically speaking, and do not feel sufficient risk is there to warrant a selloff at this time. While momentum gauges like RSI have gotten overbought, there remain precious little other evidence with regards to frothy speculation to excessive valuation measures that would warrant a major selloff. Powell’s recent dovishness likely won’t change too dramatically despite a second “hot” CPI reading, and it appears like bounces in US Dollar and Treasury yields could prove short-lived before weakness back to new monthly lows into this Summer. Rallies up to SPX-5250-5300 look possible ahead of a possible late March pullback into April. However, without any evidence of this, it pays to wait for signs of weakening breadth and/or momentum before expecting a selloff of any sort.
Wednesday’s trading proved to be nearly the complete opposite of what was shown in Tuesday’s trading. While Technology fell more than 1% to cause $SPX and $QQQ to finish negative, the broader market fared much better. Eight sectors finished positive on an Equal-weighted basis.
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Thomas J. Lee
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