U.S. Equity Markets Entering Overbought Territory February 22nd, 2016

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U.S. Equity Markets If the Dow Jones Industrial Average gets into the 16,800 to 17,400 range I would be looking to short the exchange traded funds which mirror the U.S. equity market. These exchange traded funds include DIA (mirrors Dow Jones Industrial Average), QQQ (mirrors NASDAQ Composite), SPY (mirrors S&P 500), and IWM (mirrors Russell-2000). I would also be looking to exit any long positions which had been bought lower. At today’s open the exchange traded fund SPY (mirrors S&P 500) gapped up from the previous day’s close. There are now four gaps below on the SPY daily chart which go down to the 182.86 level, equivalent to about 1100 points below today’s close on the Dow Jones Industrial Average. Today SPY closed at 194.78, almost 12 dollars above the last gap. I expect the gaps below to be filled sometime in the late spring/early summer. If the Dow Jones Industrial Average gets into my range I would look to cover the short positions once the gaps below are filled. If the S&P 500 futures close above the 2008 level on the weekly chart I will then get a buy signal on the U.S. equity markets. I do not expect this to happen as the U.S. equity markets are almost at an extreme overbought condition. The Dow Jones Industrial Average closed up 228.67 (1.40%) at 16,620.66, the NASDAQ Composite closed up 66.18 (1.47%) at 4,570.61, the S&P 500 closed up 27.72 (1.45%) at 1,945.50, and the Russell-2000 closed up 11.73 (1.16%) at 1,021.74. Description: Description: S:DocumentsBlakeMarket Maker SummariesPicsSPY_4DailyGaps_022216.png Four Gaps Below on SPY Daily Chart Follow Steve on Twitter at @stevekalayjian Crude Oil I am currently on the sidelines in crude oil. I am now looking at the April contract for crude oil WTI. There are still rumors about a possible crude oil production freeze by OPEC and non-OPEC members. A crude oil production freeze at current levels would not mean much as crude oil production in many of these countries is close to maximum capacity. If crude oil continues to push up I believe it will be short lived. I am bearish crude oil and I expect crude oil prices to break the 2016 low of 26.05, possibly testing the 18-22 range sometime in the next couple months. I believe a push down into this
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