Of the 1,000 or so charts I looked at this past weekend, three stood out…

The first one that stood out was the S&P 500 Index plotted against its Bollinger Bands.

Bollinger Bands measure the most likely trading range for a stock or index, given the most probable level of volatility. When an index trades above its upper Bollinger Band, it’s in an extremely overbought situation and is vulnerable to a reversal lower…

The red circles on the chart show the five times in the past year when the S&P 500 closed above its upper Bollinger Band. In all four previous occasions, the S&P 500 fell back down toward its lower Bollinger Band over the next month. A similar move this time around could lead to a drop of around 40-60 points in the S&P 500 – if only to relieve the extreme overbought condition.

…..2 more charts plus all commentary HERE