Is The Stock Market Overbought?

Summary

• A metric I monitor for gauging market sentiment tells me that the near-term outlook for the market appears overbought.
• History suggests, although in no way guarantees, that as the Overbought-Oversold Indicator approaches and exceeds +1, the risk-reward prospects are skewed to elevated to the downside for stocks.
• The current reading is 0.86, which is still modestly below +1, and so presumably the bull still has room to run.
• The market has already priced in a favorable outlook from artificial intelligence and other tech-related drivers that are skewing S&P 500 earnings to the upside.