This indicator warns of a stock market correction!
My fellow Steemians,
Stock prices have risen sharply in recent weeks. According to various analysts, the Bear Market is already behind us and investors may look forward to further rising stock prices. An important indicator, on the other hand, shows that investors should take a stock market correction into account.
The chart above shows the price chart at the Russell 2000 index. This index consists of 2,000 US small-cap stocks. An important indicator is shown at the bottom of the graph. This indicator shows the percentage of the shares within this index that move above the 50-day average. Yesterday, that percentage rose to 85%.
This seems to be very beneficial, but it certainly is not. After all, this percentage indicates that the market is quite 'over-bought'. In recent years, such a high percentage has always led to a stock market correction in the two months that followed. So we have been warned.
Thank you for reading!