Chart of the Day – Wednesday, March 27, 2024

This is the 10th week the S&P 500 weekly RSI has been above 70.
Takeaways:
1. “overbought” doesn’t mean it can’t stay that way for an extended period of time.
2. Since 1970, the market has been “overbought” twice as long in two prior instances. $SPX $SPY pic.twitter.com/MLwJkt0NX0

— Andrew Thrasher, CMT (@AndrewThrasher) March 27, 2024

Today’s Chart of the Day was shared by Andrew Thrasher (@AndrewThrasher).

• The S&P 500 is gaining momentum, with weekly RSI at a four-year high of 78.8.

• Andrew points out that RSI has been “overbought” (above 70) for ten consecutive weeks — the longest streak in six years. The market rarely stays overbought this long, but previous extremes have lasted significantly longer.

• Overbought sounds bearish because it implies excessive or unsustainable buying. However, it just means that price is stronger than usual.

The takeaway: Legendary Technician Alan Shaw said it best — “The most bullish thing a market can do is get overbought and stay that way.”