“At some point this month, or next, RSI levels will likely give hints of when the market is topping, especially if 70 holds in the upcoming week. This would then be considered the start of a back-and-fill process following last week’s breakout to higher highs. The key for the bulls will be to hold fresh support levels that served as prior resistance and we will cover that in a moment.”
These were our thoughts coming into last week based on the technical setup of the where the major indexes were at and not based on the talking heads theory of a post election selloff. In any event, RSI (relative strength index) levels are now at neutral readings and fresh support levels held that served as prior resistance levels.
RSI on the Nasdaq is now right at 50. For the S&P and the Russell, RSI readings are at 52 and for the Dow, 56. A close below 50 across the board this week would be a slightly bearish development for the market and likely suggest a near-term peak.