OBOSS Market Timing 05/17/13 ‘OBOSS at 2.54’

OBOSS closes at extreme overbought levels for the second week in a row.

At the risk of sounding like a broken record… the market is unusually extended.

While we have seen extreme levels hold for two weeks in the past, this is not common for OBOSS readings.  The S&P 500 is about 12% higher than it’s 200 day moving average which is also considered a rare event.

There will be a consolidation in the near future.  Consolidations come in as sharp price corrections or through extended periods of sideways price action.

Since we don’t know how the market will consolidate it is always good to be defensive when the market gets this extended.  That doesn’t mean selling your positions on the first extreme indication,  but it is good practice to lock in some profits as the market extends higher.

OBOSS levels higher than 2.5 is a very good indication of an impending pull back in prices.  This is a good time to reduce risk, close margin, and take profits by scaling out on moves higher.

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