The Nine Most Overbought Nasdaq 100 Stocks

As stocks continue to accelerate to the upside those under-invested money managers are wondering how they can “dress up” their portfolios by the end of the year. The Dow Industrials led the charge, Thursday, gaining 0.75% for the 50th new closing higher of the year.

The Dow’s gain was significantly better than the 0.47% higher close in the S&P 500. The market internals were positive but not stronger than prices, with 1650 issues advancing and 1439 declining. The Advance/Decline lines have confirmed the price action but the NYSE McClellan oscillator did turn lower on Thursday.

Many of the stocks that money managers would like to have in their portfolios are in the Nasdaq 100. The PowerShares QQQ Trust (QQQ) is up 4.4% in the past six days as it closed Thursday at $87.74, which is 0.7% above its monthly starc+ band at $87.07.The QQQ has not been this close to the monthly starc+ band resistance since March 2012. This preceded a 12.4% correction.
The monthly starc+ band scan of the Nasdaq 100 stocks as we approach the end of the month reveals that there are nine stocks that are 8% or more above their monthly starc+ bands. Many of these stocks have been close to these bands for several months. The top stock on the list is Yahoo! Inc. (YHOO), which is up 104% for the year and 22.5%, so far, this quarter. It is currently an astounding 18% above its monthly starc+ band.

These market-leading stocks can still go higher even though they are high risk, basis the monthly starc band analysis. As was the case for SPDR Gold Trust (GLD) and Apple Inc. (AAPL), trading near or above the monthly starc+ bands for several consecutive months does often warn of sharp, and sometimes long-lasting, corrections. One needs to keep an eye on the weekly and daily analysis in conjunction with the monthly technical studies to obtain advance warnings of significant tops.

Of course, the risk analysis quickly also tells one which stocks or ETFs are too far above monthly support which requires stops very wide stops on new positions. For example, if you bought YHOO, Thursday, at $40.65, a stop under the month’s low at $$36.25 would be a risk of more than 12%.

These four most overbought Nasdaq 100 stocks are the ones I found the most interesting from the most overbought list.

http://www.forbes.com/sites/tomaspray/2013/12/27/top-9-overbought-nasdaq-100-stocks/