The US Stock Market is Very Overbought

We're sitting here this morning, with our Asset Allocation Model very bullish for the long-term (next 12 months), but out of the corner of my eye, I see this.

The US stock market is very overbought.  The orange line (intermediate term indicator) in the chart above is still moving up, but the blue line (shorter-term) has rolled over.

As I observe the traditionally "dumb" investors (speculators), I see the Rydex Ratio moving up to the highs that preceded the corrections of 2010 to 2012.

From the other side of the aisle - the smart investors - I see the corporate insiders (which can flip pretty fast) that had been buying stocks heavily last November, are now moving to the sell side.

I hope you get the overall message.  With the November to January strong months fading into history, our overriding goal is still to remain fully committed to stocks, just to use these brief interludes to do a little portfolio fine-tuning so we'll have the seeds to replant when/if the market corrects.

Don Hays

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