The overbought market in the US, likely to start a price correction

If I told you the S&P closed one week ago at 2166 and Thursday at 2165, would you believe me? It's true. This is why it is so difficult to buy overbought markets. Oh, I know the commentary out there: Overbought markets that don't go down are bullish. But are they bullish enough to want to keep adding to stocks?

And what of the Russell 2000? Well, eight trading days ago it tagged 1205 and today it stands at 1203. Eight trading days is two days shy of two weeks. That's a long time for stocks to go nowhere, especially when the mantra has been to make you believe the market has been nothing but up-up-up. The fact is we had a terrific rally and breakout, and once we got overbought we've churned.

I am simply noting this because if you feel as though you've missed out by waiting to buy since the market reached an overbought condition, you haven't missed a thing, have you?

What I find even more curious is that the breadth of the market remains quite strong, despite being red two days this week. And yet the McClellan Summation Index has stopped going up. If we don't see the market with a positive-breadth day on Friday, it might actually tick down.

Elsewhere, we did see some folks step toward the caution side of the market on Thursday. As the S&P fell a mere 10 points, all of a sudden we heard how maybe you should take some profits, it was time for the market to rest, consolidation is good. It's funny because we heard none of that on Wednesday when the market was up about the same amount as it was down on Thursday.