The US stock market looks like it’s getting too hot, as most of the stocks in the NYSE Composite Index are trading well above their 50-day moving average. The NYA50R indicator tells us that 81.04% of the stocks are above this level, which is pretty high compared to history. This means that the market is stretched and could snap back anytime. But the BPNYA indicator shows us that 65.04% of the stocks have a Point & Figure buy signal, which means that the market is still going up and has some support. The difference between the two indicators makes us wonder what’s going on, as some parts of the market are doing better than others. In the next few days or weeks, the market could go either way, as investors try to figure out what to do with these mixed signals. Maybe the market will drop a bit and shake off some of the froth before going up again. Or maybe the market will keep going up and make new records, but with less enthusiasm and participation than before. Investors should be careful and smart in this situation, as the odds are not in their favor for buying more stocks. Sell some risky and volatile stocks that could fall hard in a market drop. Set up some rules or tools to get out of positions if they lose too much money or if they want to keep their gains. Watch the NYA50R and BPNYA indicators closely for any signs that the market is changing its mind or sticking to its plan.
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