The stock market’s surge Wednesday produced the most overbought reading in the NYSE Arms Index since Dec. 31, 2012, but that’s not necessarily a bad thing for investors. The Arms is a volume-weighted breadth measure that tends to fall below 1.0 when stocks rise. It closed at 0.386 Wednesday, as the Dow Jones Industrial Average soared 619 points, the third-biggest one-day point gain in its history. Many chart watchers see declines below 0.50 as suggesting an overbought condition. The last Arms close below 0.50 was Aug. 10 at 0.41, and the Dow slid 212 points the next day. But on Dec. 31, 2012, the Arms closed at 0.22 as the Dow surged 166 points, and the Dow ran up another 308 points the next session.
Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news.
From:: Stock Market News