$SPY S&P500 weekly RSI at highest levels since 2020 and 2018

A quote from Howard Marks that comes to mind when I think of current sentiment across certain equities NVDA SMCI META SPY QQQ PYPL SOFI 👇

“There's no asset so good that it can't be overpriced and become a bad investment, and very few assets are so bad they can't be underpriced and be a good investment.”

This is more of an awareness call for folks who have not participated in any of the gains made over the last few months, feel they've missed out, and are contemplating opening new positions (aka FOMO) for assets that have already run up 2-4x.

For context, the S&P 500 is currently at VERY overbought levels (Weekly RSI at 75). The last time it ever had a reading that high was right before Covid in 2020 which saw a -32% correction soon after (this was a obvi a black swan event). Before that, on Jan 2018, RSI ran to 91! A -11.35% correction followed after.

The point? Typically it is ill-advised to start any large, new positions when things are this overextended. But, at the same time this is also just 1 indicator and observation, and it does NOT mean that we need to see a "sell-off". It means enter with caution, and obvi don't expect outsized returns on things that have already run up.

The Fear & Greed Index is also at 78 (EXTREME GREED) and good ol' Buffet reminds us, "Be fearful when others are greedy and be greedy only when others are fearful"

You should ALWAYS look to buy when market is in Extreme Fear/Fear levels as that's where the discounts are. You being trimming/ exiting positions when the market approaches Extreme Greed.

The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.