Summary:
- US30 rallies above 24000 to new record peak
- Market up over 500 points this week – on track for largest gain this year
- Weekly RSI 83 indicates an overbought market
The US stock market has moved higher once more today with the Dow Jones Industrial Average (US30 on xStation) moving above the 24000 handle for the first time ever. The market has been in a clear uptrend for quite some time now and there are some signs that the pace of the gains is increasing.
If we look at the time taken to reach the next 1000 milestone there is a clear acceleration in the latest rise with just 44 days elapsing since the market broke above 23,000 for the first time. This comes after a 76-day period was taken to move from 22,000 to 23,000 and 154 days between the time the market first broke 21,000 and 22,000..
The time taken to reach the latest milestone in the US30 is one of the lowest on record. Source: Pension Partners
Looking at a weekly chart of the US30 it is clear to see the prevailing uptrend and also that the current weekly gains are one of the largest this year. In nominal terms the current candle is in fact the largest seen since last December and further supports the notion that the rally remains in full swing.
The US30 could be on track to post its largest weekly gain of the year after breaking to yet another all-time high. Source: xStation
Despite all trend indicators signalling the market is clearly in an uptrend, there is a feeling that it may have gone too far too fast and be overbought. The relative strength index (RSI) is one metric which traders can use to assess the overbought/oversold conditions in a market and the reading on a weekly chart for the US30 is of particular interest. Analysts can use either 70 or 80 depending on their individual preference when looking for an overbought RSI, but by either measure the US30 is in overbought territory at 83.2. In fact this is the highest reading seen in several years and could be seen to suggest that the latest move higher is over extended and could be vulnerable to a pullback.
The RSI on W1 for the US30 is at 83.2 – its highest level of the year. Source: xStation