After ending 2012 up almost 12% the S&P 500 (^GSPC) saw the fiscal cliff averted and has continued on its way up to 5-year highs in 2013.
But is the stock market now overbought, meaning equities have now risen to such a degree that they’ve reached the upper bound and may be headed down?
Bespoke Investment Group issued a note Tuesday saying 79.6% of the stocks in the S&P 500 were overbought. Also according to the firm, 90% of the stocks in the S&P 500 are currently trading above their 50-day moving averages, the highest reading over the last year. Meanwhile, this is only the sixth time we've crossed this barrier since the bull market began in 2009.
But Breakout host Jeff Macke does not share this concern, telling The Daily Ticker, “It’s not my first rodeo – this is what bull markets look like!”
“Overbought markets can become more overbought and I think that’s what’s happening here," Macke says.
Related: Say Hello to a New Bull Market?
There have been concerns in past months that Apple (AAPL), the largest U.S. publicly traded company, could bring the S&P down with it as the stock fell close to 27% from highs in September.
These worries have continued as Apple reported record quarterly earnings yesterday that slightly missed Wall Street expectations for revenue with iPhone sales below targets, sending the stock down 8% in extended trading.
Related: Apple's Saviour: A New Cheaper iPhone?
It’s a trend so far the broader market has bucked, which Macke says is a sign of resilience.
“You shot the general and the army still won,” says Macke, “that’s positive!”
Macke’s bullish on the broader economy, too, and thinks we could see U.S. GDP growth of 4% - 5% this year (because of the economic cycle, not Washington).
In terms of where the market goes if we see that kind of growth, Macke won’t name a target.
But he does offer one prognostication. Macke thinks we will see a pullback once the S&P reaches 1500, but even then he’s not looking for a big selloff.
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