As a follow up to my Apple article I wrote last week about the impending pullback in that sector, I wanted to draw your attention to the Computer Hardware Index and the ridiculous state of overbought it is in as one more reason to expect a pullback not just in Apple, but in this whole sector. And for the record I expect the pullback to be a good buying opportunity for some quick gains.

Why it’s Overbought

The 12 month period between April 09 and April 10 this index moved 500 points. It’s moved 400 in the last four months. The velocity of this move is unprecedented and the RSI has remained above 70 on the daily chart for the longest time since this index has been kept track of.  (not shown here, but take my word for it)

What do I consider a decent pullback?

I think this index will pull back enough for the RSI to gravitate to the 40-45 level. That is where I would start to add some of the stocks below, which happen to be the strongest in the sector.

4 Strongest Stocks In This Sector

Related Posts:

Apple: Classic Climax Top Forming

Low Volatility Leads To High Volatility

Market Timing & Sector Charts

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