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06-23-14 SPX Daily Headline Chart

Reversal risk elevated as equity indices are vulverable with confluent overbought indicators.

06-23-14 SPX Daily Headline Chart

The relentless grind higher of the U.S. equity indices can't be denied. However regardless of one's optimism, indices are nearing extreme overbought levels with confluent confirming indicators. For example, SPX RSI2 ended Friday's trade greater than 97 and RSI5 greater than 80. Both are at extreme short term overbought levels. What's more, the current angle of ascent and distance away of widening (weaker) moving average support levels is a recipe for a sharp throwback.

Prudent investors/traders are advised to wait for the inevitable throwback before considering any new longer term exposure. Risk takers may consider selling strength at current levels.

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