IS SPX OVER EXTENDED?

Although I more or less hate the word “over extended”, I use it since it describes quite well a situation when the market has risen too much too fast.

So you say, is SPX over extended now? Yes it is. Does it mean we go down next week? No, it doesn’t.

However, over the past 3 years, when SPX has been in this “situation” we have been very, very close to a significant correction. Of course, there has to be a catalyst for a correction (well, not always..) but such can be bought and printed in the papers. Generally, the news tend to snap on bad things since bad news sells much better than good news.

Below a daily SPX chart.