Stock Indices Finish Friday Extremely Overbought.

The Stock Indices closed Wednesday in an extremely oversold condition. This led to the rally that occurred on Thursday. Friday saw follow-through and strong breadth, suggesting strength, although volume was extremely low. Monday, the Indices will open extremely overbought. This suggests the possibility of some type of rotation to work off the overbought condition. How that develops will be important. Either it will lead to the beginning of another leg lower, or it will work off the overbought condition and allow for another thrust higher. Therefore, understanding Monday’s price development should provide for the next greater degree of time and price move.

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