Stocks overbought – the S&P 500 was up 3 basis points after giving back some of its early gains on Tuesday.

The other indexes were also slightly positive. As you can see from the chart below, the S&P 500’s 14 day relative strength index is at 69.49 which puts it just 51 basis points away from being overbought.

One more up day should do it. The CNN Fear and Greed index fell from 77 to 74 which took it from extreme greed to just greed. Even though stocks were up, the index fell partially because of the 2.8% increase in the VIX to 12.50.

In January stocks levitated while the VIX increased. Historically, this hasn’t meant much, but in that case it added to my call for a pullback because sentiment was the highest on record and global synchronized economic growth was ending.

This current market isn’t like January in terms of the VIX because we won’t see such a washout in the short VIX trade anytime soon as some of those products were discontinued. The next correction will be different.

Stocks Overbought – President Trump Jabs Twitter, Facebook And Google

The best sector was real estate which was up 1.19% and the worst sector was telecom which was down 0.48%.

President Trump commented on Facebook, Twitter, and Google, saying they “have to be careful” of political bias. He said they are in “troubled territory.”

The President controls the executive branch which is in charge of regulations, which means his comments on these firms are important. Twitter stock fell 1.11%; Facebook stock fell 0.68%, and Alphabet stock fell 0.86%.

Any action against these firms would be a big problem for the market as Facebook and Alphabet are two important members of the FAANG market leaders.

Facebook stock has been on a rough run after its disappointing earnings report. The stock is down 2.84% which is a double digit underperformance compared to the S&P 500.

I’m still not willing to write off the stock though because Instagram is probably the most important property on the internet for millennials.