Overheated Indicators Signal a Market Pullback

Inertia. [Jeff Clark's Market Minute]( Overheated Indicators Signal a Market Pullback By Brad Hoppmann, analyst, Market Minute Get ready to hold on tight… The sharp, year-end rally has pushed several key market oscillators into extremely overbought territory. Conditions are now ripe for a near-term pullback as this rally burns red hot. Today I want to look at a few indicators to illustrate this. First – as [Jeff Clark recently noted]( – the McClellan Oscillator has surged above +60 into severe overbought levels on both the NYSE and Nasdaq. Based on historical patterns, readings exceeding +60 have frequently marked the beginning of short-term topping points like the declines in November 2022 and January 2023. Recommended Link [From -60% Account to Doubling His Money?]( [image]( After helping his readers double their money 13 TIMES in the last year alone… There’s ONE person trader Jeff Clark has NOT been able to help! His 23-year-old son, Grant. Like many people, Jeff’s son was sucked into the hype of crypto and tech stocks... His investments have taken a colossal beating, a -60% LOSS. Jeff tried to warn him… But it was no use. Today, [Jeff is in Miami, Florida, and in a moment he’s going to grab his son]( because it’s time to help him get back on track. Jeff’s staging an emergency “Financial Intervention.” [Click here to see how Jeff plans to turn his son’s -60% loss into a HUGE win.]( -- Now, let’s take a closer look at the S&P 500… [Image] Last week, the 14-day CCI Index Indicator spiked above 100, confirming wildly overbought momentum (a reading above 100 means overbought, and below -100 means oversold). I use the CCI index as a confirmation to other oscillators like the McClellan Oscillator and RSI. Jeff pointed out that the McClellan Oscillator hit extremely high levels on Friday. The CCI index does a great job confirming overbought conditions. When the index comes back down below 100, it’s usually time to sell. Over the past two years, whenever the CCI index has punched above 100 and confirmed overbought conditions, it has led to numerous short-term pullbacks in the following weeks, like in mid-July, the end of August, and mid-October. Expect similar results in the next week. The S&P 500 also crossed above its 50-day moving average Friday. Prices tend to pull back toward the mean following similar circumstances. All these overbought oscillators suggest we've likely reached a tipping point where the risks outweigh potential rewards over the near-term. The Opportunity Within Market Turbulence While pullbacks may cause unease for some, embrace them as opportunities. During these market downturns, traders can find bargains and position themselves for future gains. My algorithm has identified the retracement levels on the S&P 500 near 4,265 and Nasdaq near 14,800 for the time to buy this pullback. These levels represent potential support, and history has shown that stocks often bounce back from these points. Now, let’s look at one sector that could offer especially favorable entry points during this pullback: consumer discretionary stocks. Consumer Discretionary Stocks: A Compelling Case As the year ends, investors usually turn their attention to consumer discretionary stocks. That’s because they expect holiday shopping to push discretionary stocks higher. These companies cater to consumers' desires rather than their basic needs, making them particularly sensitive to economic trends and year-end rallies. Free Trading Resources Have you checked out Jeff's free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career – at zero cost to you. Just [click here]( to check it out. The Consumer Discretionary Select Sector SPDR Fund (XLY) tracks this sector and could provide a diversified way to gain exposure to these stocks. If XLY approaches 155, it could represent an attractive entry point for the sector and the stocks within the sector. [Image] The next few weeks should bring about caution as the market corrects from the latest surge upward and savvy traders should stay nimble and keep an eye on these oscillators. Their extremes have repeatedly warned of rapid snapbacks. Leveraging data for you, Brad Hoppmann READER MAILBAG Are you watching discretionary stocks? Let us know your thoughts – and any questions you have – at feedback@jeffclarktrader.com. IN CASE YOU MISSED IT… [Google millionaire reveals #1 AI stock recommendation]( The name of the man in the picture above is Colin Tedards. Google paid him over $1.5 million in 2022. [(Click here for tax documents proving payment).]( And based on his knowledge of how Google works, he’s just released details on his new #1 AI stock recommendation. It’s a company that’s supplying Google with a key piece of technology for their new AI project. And Colin says that as Google rolls out this new AI project, this little-known supplier could skyrocket. [Click here for the full story.]( [image]( [Jeff Clark's Market Minute]( Jeff Clark Trader 55 NE 5th Avenue, Delray Beach, FL 33483 [www.jeffclarktrader.com]( To ensure our emails continue reaching your inbox, please [add our email address]( to your address book. This editorial email containing advertisements was sent to {EMAIL} because you subscribed to this service. To stop receiving these emails, click [here](. Jeff Clark Trader welcomes your feedback and questions. But please note: The law prohibits us from giving personalized advice. To contact Customer Service, call toll free Domestic/International: 1-800-752-0820, Mon–Fri, 9am–7pm ET, or email us [here](mailto:contactus@jeffclarktrader.com). © 2023 Omnia Research, LLC. All rights reserved. Any reproduction, copying, or redistribution of our content, in whole or in part, is prohibited without written permission from Omnia Research, LLC. [Privacy Policy]( | [Terms of Use](