4/5/23 Overbought Pressure Relived, Jamie’s Warning


Markets opened higher on Tuesday and showed clear signs of being overbought.

As the trading session continued, selling pressure became too great for the bulls, and markets slipped into the red.

At the close, all the indexes were modestly lower…

  • Dow Jones -0.6%
  • Nasdaq -0.5%
  • S&P 500 -0.6%
  • Russell 2000 -1.8%

Sector Round Up

Some sectors managed to squeeze out gains despite the selling.

At the close, 4 of 11 Sectors were higher.

At the top…

  • Utilities (XLU) +0.5%
  • Communications (XLC) +0.3%

At the bottom…

  • Materials (XLB) -1.4%
  • Energy (XLE) -1.8%
  • Industrials (XLI) -2.2%

Words to Sell By?

Headlines blamed the selling on JP Morgan’s (JPM) annual letter to shareholders.

Image by Shutterstock

In the letter, CEO Jamie Dimon writes, “The current crisis is not yet over, and even when it is behind us, there will be repercussions from it for years to come.”

If indeed this letter was the culprit, the Financials (XLF) sector should have shown a stronger reaction. It ended the day off less than 1%. 


The Russell 2000, representing the most risk-on stocks, fell harder than the rest of the market during yesterday’s session…

RUT Daily Candles – Chart by thinkorswim

It’s also the only major index trading below its 50-day and 200-day moving averages.

While the big three enjoy the rally, the Russell 2000 shows us the current rally lacks unity.

Our outlook remains cautiously bullish.

Here’s a recap of our top indicators…

  • The VIX moved slightly higher, but settled near the lows of the day
  • RSI levels retreated from overbought—all four indexes are now neutral
  • The Put-to-Call Ratio is oversold


Just two trading days left before the long weekend.

The amount of risk traders are willing to take on ahead of the weekend will be telling. 

We’ll be keeping close tabs on the price action over the next two sessions.


^Open Position
*Low Float

*BLPH support at $8
ARCT support at $24
SCYX on watch
INZY support at $5, resistance at $6
IFRX support at $3
ALDX resistance at $10, support at $9
NAAS support at $10
DTC support at $7
VKTX support at $16, resistance at $18
^EMAN support $2
^SQSP on watch
DNMR support at $4
APLS support at $70

Secondary watchlist—float 100+ million

^IOT resistance at $18, resistance at $20
KC on watch
XERS on watch
AUPH support at $10
RIOT support at $9, resistance at $10
^IONQ support at $6
OSCR resistance at $7
ARDX support at $4.25

Leave a Comment

Your email address will not be published. Required fields are marked *