Stock valuation: A major overbought signal just flashed for US stocks

The stock market will collapse. It’s a bubble that has reason to be where it is. It’s a game for the very wealthy that continued the same casino mentality that existed prior to the last crash in 2007. And there is no one in government sounding the alarm–just as in 2007:

For months, stock market pessimists have been saying that US equities are overvalued.

And, as of this past week, they have a major piece of tangible evidence.

The measure in question is the so-called relative strength indicator (RSI), which indicates when the stock market has gotten too stretched in either direction. When the measure exceeds 70, that means it’s overbought, and a downturn may be imminent. Meanwhile, a drop below 30 for the RSI indicates an oversold condition.

The RSI for the benchmark S&P 500 climbed above 70 last week, and stayed in that overvalued territory for five straight days. Now, the index’s repeated climb to new record highs is in danger — at least if the past 12 months is any indication.

What's on your mind...