david: if you change the perimeter of the rsi, that could change.you look at the nine week rsi, it is the highest level it has been since 1971. you need to be careful with rsi and momentum because momentum is measuring the speed of the trend, not the tread reversals. it is all about how fast the trend is moving. it shows that we have moved this fast in 40 years. signalen, an actual sell is not there, which is only when that momentum drops out of the overbought area. guy: how does that compare with the european equity markets? what are the technicals looking like around europe versus the u.s.? david: i think the technicals very constructive. they have done very well with the headwind of the high euro. if we see yields begin a more significant path higher, we will see a retracement. i think that will be a positive. countries in europe, italy especially, is getting close to significant long-term levels. 24,500, thatround would be a pretty significant base. france is still very constructive. they have just underperformed the u.s. if we see a positive th

you missed it, get over it there is now an rsi of 84. it is off the charts relative even to its own sceptor. you got the 2015 high broke 7 on bucks. if this does that take out the 2015 high, think about what will happen to sentiment amongst the traders. so i would let it set up again and if it doesn't, oh, well, cannot buy empire state building charts this stage of the game. >> hang on i want to go back to eamon javers who is at the white house. we understand that there could be a meeting coming up and an important one at that. >> reporter: yes, that's right this represents a possible opportunity here to break the logjam in negotiations over the government shutdown. kasie hunt reporting that chuck schumer has been invited by the frod co president to come to the white house to talk about where they go from here in terms of a government shutdown. remember the deadline is midnight the president as we speak is in the rose garden addressing that march for life event the president is also being telecast down on the national mall where there is

the s&p 500 is an rsi over 80. historically from a shorter term basis you are not rewarded for buying 80 relative strengths in these names, so you do not have to rush in today just because you're not as long as you felt like you should have been. >> unless you feel, erin, that you'll be 300, 400 points higher than where we are today. >> yeah, you have to lock at what's underpinning this real. it's being underpinned by strong economic growth, very easy financial conditions, real rates which have actually decreased since the tax bill was passed in mid-december, and you're still having very credit conditions leading to a robust outlook plus earnings upgrades hitting on the back of tax reform which we saw and we're starting to see in the first quarter -- fourth quarter earnings results the other interesting fact to keep in mind is that when you look at last year's performance, retail community did not participate in that real there were actually not net inflows into u.s. equities into domestic equity purchases last yea

take a look at the rsi above 80.atie stockton, the head of technical analysis, saying sentiment is overbought. she sees a 5% pullback is left. it will be interesting to see what triggers this. a lot of agreement that conditions are overbought. vonnie was talking about deals. we have deals in the insurance space. let's take a look at this reinsurer. shares are up 44% on the news that aig is buying the company for 5.6 billion dollars in cash, giving a pop to the entire space. aig down 1.5%, but the acquisition seems very much in line with the ceo possibl to 's goal to grow the company through deal. s. let's take a look at the biotech space because we have it up sharply up 62%. that is the biogen spin out with bought byg santa fe. juneau is up nearly 27% as celgene is buying the company for its blood there. apy treatment. that is the main reac reason for that purchase. about $9 billion and since this deal was first talked about last ,eek, shares more than up nearly doubled. it was a $44 stock last week and $86 on this m

the 14 day rsi at 80. a multiyear high going back to 1988. cleverly and clearly overbought. it doesn't mean a decline is imminent. 78%gauge has been positive, of the time with average returns of 2.6% in the 12 weeks after its rsi crossover of 14 week readings up 17. something to consider as global equities go from strength -- spread to spread. gold futures running into technical hurdles. they climb play one year high in september -- to a one-year high in september. the difference between bullying futures, moving average convergence and divergence indicator, the white line at the bottom just there and the so-called signal line which is the red line just below it, has narrowed, suggesting the rally could be losing speed. he does a we could see further upside in prices. resistancehat macy will take resistance the relative strength index to 17, matching the indicators back on september 8 when prices reversed. a lot of technical analysis. let's get to palladium. a shortage of palladium has seen prices skyrocketing 2001 levels. it has led to a drop in physical holdings. that is th

and i think he made the point that markets top pretty much a year after rsi or momentum peaks. so even if we are at these extreme levels, in and of itself, that is not a profitable symbol to be trading on. whether you take profit or short the market can you go back it prior examples from 1980s, 50s, 090s, where you have maximum momentum thrust higher which is what you are experiencing now markets could be as much as 30% higher 12 months down the road i think it is important to recognize things are pretty much as good as they get from a momentum standpoint. but that in and of itself is not enough to say, get out of everything at the top. >> what do you think about the other sentiment indicators like aaii -- >> i do think about that stuff i know that sentiment add extremes in hindsight has more market tops. however, invert, should sentiment be really good right now? >> i don't think there is any reason sentiment should be very good >> it is concurrent more so than forward-looking. >> if sentiment turns into wild speculation which we are seeing in some areas of the market, i guess

goldman sachs optimistic there will be further advances and the rsi is falling below 70 today.elow 70 was in november. , it is a rallyth in commodities -- is the rally in commodities over? go --: every say i will every day i say i will go simon cowell on the contenders but you always do well. the first time you have faced each other and i love your chart, mark, but i will award the battle of the charts ground to kevin kelly. -- crown to kevin kelly. coming up, austan goolsbee. this is bloomberg. ♪ >> i am mark crumpton with first word news, president trump says michael wolff's behind the scene book on the white house is full of lies but michael wolff tells nbc he can back everything up. >> i have recordings and notes. way certainly and in every comfortable with everything i have reported in this book. sale today,goes on already number one on amazon. the environmental protection agency is touting cleanups in seven of the nation's most polluted places as his signature accomplishment in the trump administration's efforts but records show the work was completed before donald trump

the rsi is pounding into overbought territory. with to nameong but a few.toxx 600 isn't aggressively overboard as the other. this is a 14 day rsi on the major indices. we have gone back to 1980 with our data. the chief culprit is the conglomerate. the dividend yield on the s&p 500 has fallen below the two-year yield for the first time since 2008. do you go for this great rotation? we have run the data and there's nothing new. all the way back to 1977, we are seeing this is a typical thing. we are mounting up and markets is melting down the analyst estimates. we have a pounding on these levels. 2800 by the end of the year. bank of america calling for higher s&p. the politics and markets and earnings have got to deliver to sustain this kind of move. those are your markets, anna. let's get your first word news. juliette saly standing by. juliette: u.s. president donald trump is close to making a decision on his nominee to be vice-chairman of the fed. the number two position has been vacant since stanley fischer retired. the nomination will be a part of a wider

opportunity to trade some of this stuff there's a good part of my position, in fact i sold emm today at 83 rsi at the top end of a channel, a channel on emm that goes all the way back to where we built this rally, december 22nd of 2016. you've been able to trade that lane em banks are one of the most interesting places to be here. >> let's talk about our day now, what did you do? >> sticking with eem, for the very short period, if you have materials, i would prefer to own eem longer term. for the next two quarters, materials, for the near term, the next several weeks, you stick with the materials i added to eem >> i was waiting for the answer to my question what did you do today? >> my final trade last night was ewz, i put my money where my mouth is that goes into your emerging markets, your materials trade in a sense. i actually think i like these a little bit better than i do the materials, only because they've been somewhat beaten down, relative to the materials. so i think there's a better opportunity with like brazil or the emerging market type of thing. >> continue to beat the drum quick

that they showing you are passed above territory on the 14 day rsi. what you have seen this earnings season, do they still have momentum to keep gaining? >> i think they do. there is a positive backdrop on these banks in general. especially the strongest banks. the returnnefit is to shareholders. we still haven't seen yet the dividends and share repurchase is that are going to benefit the big banks. cap tilde employment is the key gothe future of go -- growth. vonnie: didn't have the best third quarter. that theimated benefits will go to read purchases the big banks. it looks like we are in line on that. when it comes to the -- season overall, it was a bit messy, wasn't it? however, over the long-term, does it work out for every bank that the tax reform has been good? >> the short answer is yes. we had a kitchen sink quarter for the banks. there's a write-down of deferred tax asset that looks like a negative, but isn't a negative. it needs you can't use it as tax credits in the future, but you lower taxes.ing so those writeups that mean anything. the

tot could be what's helping signal the rsi isn't over by territory here.e now in terms of oil at least coming off for today. breaking up that several day streak. yvonne: thank you. trading unit is picking up a in australian lithium minor. an asiant move by .utomaker aut david, what's the strategy this investment? right.'s groupading unit of toyota announced its investments in $230 million. they australia headquarters. introduced lithium in argentina. this is about securing long term supply of lithium. what they see is fast rising demand. we're really seeing that demand by forecastharged of rising penetration of electric vehicles. which is really going to need amounts of raw materials to produce the batteries that vehicles.power those back in october, goldman sachs they forecast lithium production needs to quadruple over the next decade just to meet the demand. they said was quite unprecedented in the commodity arena. seeing producers, traders looking to lock in those supplies. its doubled capacity at facility in argentina. two parties say they're looking j

this is the rsi or momentum indicator on the s&p 500. when it goes below 30, that suggests the market is oversold. we saw that back in the mid-90's, for the most part in between those two levels, hitting levels we have seen all the way back to 1995. interestingly, some technicians don't mind that. they say it is a signal of strength. it will be interesting to see how long it lasts. mark: i love that chart. rising for a eighth consecutive day. the gator developed markets is enjoying its best street in history. index is at markets its longest streak in history without a 10% correction. great stuff from goldman sachs. this is wm morrison supermarkets, enjoying christmas season. same-store sales beating estimates. shares up by 2%. premium rain shares up as much as 4.8% -- rate shares up as much as 4.8%. retail sales rose a meager six point -- .6% according to the british retail consortium. clothing chains, department stores taking a hit as fast food price inflation eats into the amount of disposable income. with one of the biggest movers in

should we be concerned about these technicals and the 14 day rsi? michael: for sure, you will get pullbacks periodically. surprises, we get a government shutdown, for example, it would cause a blip here. crazy stuff on china from the trade front. these things would be temporary. -- of course, we could get a major scary pullback at any point. given that you said this is rational exuberance, tell me where corporate america will see its profitability increase from. walmartdollar extra at going to give the demand and put is necessary for this economy to continue to grow strongly? michael: you could have a very whereve symbiosis companies do invest more in their businesses and pay more to the people and they will have more money to spend in the economy and you will end up with more money coming into companies. it could happen. in my business, we always spend a lot of time wondering about what can go wrong and what could the right. no one has a crystal ball that works. you have to be prepared for both possibilities. shery: will the federal reserve be the

seems to be on the brink of a break out but gardner says it is an exception rather than the rule the rsi is above 70 for the first time since mid-2011. classic sign that oil has been overbought and do you for a pullback swing of how high it went and the up trendlevel has been traveling in the 2016 low. bottom line put it all together and gardner things the chances of oil rally is slim when you look at the price of crude out five years, prices are much lower the charts and especially the huge net position and the fdc position support my view, proceed with caution. "mad money" is back after the break. you always pay your insurance on time. tap one little bumper, and up go your rates. what good is having insurance if you get punished for using it? news flash: nobody's perfect. for drivers with accident forgiveness, liberty mutual won't raise your rates due to your first accident. switch and you could save $782 on home and auto insurance. call for a free quote today. liberty stands with you™ liberty mutual insurance. that's it. i'm calling kohler about their walk-in bath. nah. not gonna happ

alone is not a reason for selloff we have been watching indexes needed a gun to record levels and the rsi. it signals the s&p 500 was overbought. then we got the today selloff after the big gain in stocks that was the biggest since september on friday. what is leading stocks downward? apple has been leading to declines. the shares are down 1%. yesterday there was a report that the company was cutting its iphone x production targets. today, the wall street journal is reporting a similar issue. we also have deutsche bank saying the new iphone models are too expensive to fuel a super cycle. we also have a report of bloomberg that apple executives are going to delay key features originally planned for this fall's update. broadcom and kohlberg are going in opposite directions. they may have been chosen by chips.o replace broadcom corvo is the best chipmaker today. chipmakers not doing well. ago record highs were posted. since then it is down 1.5%. integrated device technology is forecastr company's disappointed investors. boost from a a poor that a japanese company was interested in buying it.

>> the rsi is stretched at 86. that has not been seen since the.com bubble.the market is right now the s&p is 12% above the 200 day moving average. we could see the market price that low as quarterly earnings may come in a little week. long-term, the economy showing signs of strain could get could last throughout the year. maybe would have seasonal weakness in the summer. certainly the trent trained, apple 20,000 jobs. oracle may be next. it could be huge. train to $38 billion in taxes that they will pay come about the new campus here in the united states. is that good for apple? >> great for apple. what many people were recognized in as spend a lot of money on microsoft cloud as well as amazon cloud. not a lot of people talking about how could this affect in a negative way. they will build $10 billion with their data centers. these data centers will be housing your itunes music, i cloud, which they have a lot of opportunity to grow that space. i'm not that big of a fan of and i cloud. it is something they could get more user friendly and take over that space

some are pointing to the strength in rsi, that's about 75 anything above 70 does indicate that the lengthn that asset class is getting a bit too much. some tech analysts say we could see a pull dak in goback in gold >>> ryanair carried 129 million passengers in 2017, a rise of 10%. the traffic grew 3% to over 9 million customers with the load factor rising to 95% >>> the airline has applied for a uk license to protect routes ahead of brexit. the irish low-cost carrier said it filed applications to safeguard its three british domestic routes that could be at risk in the event of a hard brexit. >>> the uk is in talks to join the transpacific partnership after the brexit britain has held informal discussions with tpp members as it looks to boost exports after it leaves the eu if included the uk would be the only member that does not border the pacific ocean or the south china sea, but the british trade minister said there was no agree graphic geograph geographical membership question >>> the european bond yields rose across the board after an interview from the ecb board member he said the e

we have rsi going here. important momentum indicator tells you what will happen ahead of time. and then stayed there for nearly the entire year. normally when something is overbought it is too far too fast and due for a pullback. when a stock gets overbought and stayed that way we call it an embedded side and that's a sign of 234 credible strength. i wrote about this in get rich carefully. when you get overbought for the longest time it is the most positive sign possible as opposed to a negative just a short time like this one right here we would have been selling. from a momentum perspective lang says the chart is a thing of beauty. the money flow remains strong. in the end thinks it will be pointless to pick a top for this thing. he can easily see the rallying in 2018. he does it off the possibility. i'm laughing. i remember when dow 36,000 was a big joke because it was so wrong. doesn't seem wrong now. bottom line charts is interpreted give us a lot of reasons to feel pretty darn good about 2018. no we don't want to be complacent but i think it is a big mistake to get too cy

in white is the msci all country world index 14 week rsi.proaching a value of 90, the highest on record. some people might say this might be a little frothy and moving up to bank quickly, but what we found when we analyzed the data since 1990, when the data crosses an arc above 70 it is typically positive, and every time it is crossed over 80 it is positive for the next 12 months. momentum might slow down the equity market but that does not mean we are in for a price correction. vonnie: you might have your work cut out for you, mark. i would probably give this chart somewhere in the region of a minus, b plus. mark: im and a man. none of this minas rubbish. you know it is a bond story. let's talk about the two-year path of the treasury curve. let's make it global. let's compare it to what is happening in greece. the search for yield has sent investors to strange places, and i would not say greece is a strange place, but the search for yield has sent investors to many parts of the globe. the blue line is the greek two-year yield. the u.s. two-

if you look at the 14-day rsi come it shows the highest since 1971. momentum indicators have gotten a little overheated, and that is something investors have been talking about. individualk to the stocks, watching some of those financial earnings as they come to a close. morgan stanley, which has been bouncing between gains and losses this morning is holding onto a gain of half of 1% as the company's wealth management fees climbed to a record, raised its target for return on equity. on the flipside, bny mellon reported in-line fourth-quarter earnings per share. that they willid almost entirely offset tax cuts with reinvestment. to returning the cash shareholders but reinvesting in the business. looks like traders not liking the news today. elsewhere looking at a hotel deal, wyndham worldwide will buy la quinta hotel franchise for about $1 billion in cash. -- addingbrands like to brands like grand in and others. finally, looking at another chart on the bloomberg. tenure been watching the yield climb, now 2.6 this morning, now at 2.6% at the current tim

this is a 90 year chart of the 14 week rsi, a relative strength index of the s&p 500. as a momentum indicator, and anytime it goes above 70, it is overbought conditions. what we have now is another record. the s&p 500 at an all-time high. too many technicians, this is not going to bother them, but if it does come down, there is a series of lows and momentum coming off, so that is something you want to watch. a record high indicates that may be ahead, so this is something you want to take a look at. let's look at some of the earnings winners. check that out, up 18%, the company put up a huge quarter and beat earnings by 31% by one dollar per share per earnings. withwere upgraded sustained revenue growth the possible take over the next five years or so. almost 10%, they beat subscriber numbers in a big ay -- the company now has market cap of more than $100 billion. and travelers is up more than 4%, the insurance company -- despite hurricanes and wildfire. let's look at some car insurance, property insurance. mercury, progressive, all down. some of these companies could b

this is weekly rsi and we look 80 forhly rsi above consecutive months.hen you finally get off? i think this is so important to see all of this enthusiasm through this great bull market 88 we lept up to an statistic. jonathan: this is where it's a bit contrarian to what most evil would think. when you get an extreme overbought condition, we have have only had it four times in history. all is consistent with those periods, none of them marked the major top. when he gets an extreme overbought -- when you get an extreme overbought condition, returns are big. the underlying conditions to get to this type of condition shows such underlying demand for stocks that it tends to continue. 1986 wasn't 1987, so you have access 1987 went to 2000. there tends to be a period where you have should wrong outperformance for you get that blowup. tom: i love this chart you brought today john krinsky. i will put that chart out with a lot of notes on twitter for radio worldwide as well. moneys laterrnest today. this is bloomberg. ♪ retail. under pressure like never before. and

the rsi up around 86. which we haven't seen since the.com bubble. due for a natural pullback. broadly bullish but can see a natural trend. markets don't go up forever, they are like runners, they take a breather. we are due for a natural breather. the trade tariffs talk is perfect opportunity for a breather. i don't think it stops the trump train, though. liz: what do you say to clients, i've been waiting, i'm late on coming in, domestically, where should i put my money? >> i think you may watch for the pullback, great buying opportunity. liz: what pullback? when? we were waiting for that in october. people sitting in your seat as i told byron wean predicted it over and over and haven't seen a 3% pullback in the s&p more than a year. >> we're due for one. i could see the dow 29,000 by the end of the year. this is when you merge tax reform with regulatory cuts. i think we have nowhere to go but up in the markets. liz: dow is at 26,220 right now. it has once again climbed back above the flat line. up five points. i would say consumer confidence in the u.s. is pretty darn good. w

just under 110 with ea at 112 the stock broken out above resistance and relative strength indicator, rsiimportant momentum indicator tracking higher since december that's very positive on the other end cumulation distribution line, another key measure of money flow has been flat that's part of what i don't like about this he likes this but i'm not its biggest fan. this is going to need to pick up before merino think it's ready to run once it does he thinks it's has a lot of upside. it remains one of the hottest groups around and have more run to run in 2018 including take two interactive but the charts and what merone know suggested of ea and activision could give you better perform mass as they start to play catch-up to this tremendous outperformer run by strauss zelnick. gio in new york. >> caller: how you doing, jim. >> i am great. how about you. >> caller: good. thank you. i got a question about kodak >> yeah. >> caller: all right so do you think that due to the recent crypto craze kodak's be pumped or do you think kodak and kodak have coin to be one of 2018's hottest stocks. >> look

if you look at where apple's trading and talking about positioning and market momentum, you got a 27 rsi which means that apple sentiment is terrible. you had everything from the supply chain rumors to the reality that we know that the fourth quarter or their fiscal q1 may be shipments are south of 30 million which for the market is not great news. a lot of news is already in this the stock price. expectations are extremely low. big tech cap is as good valuation that you have and nobody has more leverage to pull than apple. >> if you think about exactly what you're saying what the other names have done going into this, going into earnings, they've done really, really well. so you look at apple. i thought apple was going to breakout. i was wrong about that. 165 becomes really important technically, that to me is where your support is but i look at something like google or amazon and it's not to take anything away from them but those charts are starting to look at hockey sticks. they're straight up. you want to take some of those profits, lock it in with an option or something like that bu

however, given the very high rsi readings that are indicative of the fast pace of the trend as it standshat piece is going to slow, so our view is that the current premium trend is going to get balanced out and we will wind up with more of a church rectory that is closer to 2900. there's ag enough, guidepost there. 2014 had a fast trend, not a lot of pull back. 2014 you had some pullback and you lined up with where that originally started. mainly: you have been bullish but the one time that you were bearish was through that shot. if we get the base case as opposed to the bowl case, could be lean into a choppy time? ari: that's when credit started to widen out, when internals started to get much more narrow. volatilityed to low stocks. that's what we are going to be watching for. checklist.top as it stands now we are seeing none of it and that's it you point why we do expect a continuation of this upturn. abigail: another great quality you had last year, you were bullish on technology. right now you like the transfers. take a look at this just breaking out. mark: ari: the dow trance -- ar

rsi, relative strength index -- commentis above 70 below 30, that tells us it is oversold.r index is aersold and perhaps due bounce, but if you look at the puritanical from the dollar is index, the dollars down. news and stagnation that twitter is trading higher. takeover speculation. bloomberg lp does have a breaking news network on ti twitter, tictoc. there is a bloomberg scoop saying that dell is evaluating 2 options one to go public, the second two by the entirety of vmware. scarlet: let's get a check of the headlines on bloomberg "first word" news with mark crumpton. mark: new york, new jersey, and connecticut plan to sue the federal government over the new tax cut. the governors of those states say it is unconstitutional and targets democrats who did not vote for president trump. new york governor andrew cuomo says the 12 most affected states are all that by democrats. rexecretary of state tillerson met with petro poroshenko in davos, the trump administration and as it was imposing sanctions on 21 people companies over the annexation of ukraine and crimea. 11 of the i

5245, you could see that we could have the topics be tested given its flashing signals. .he 14 day rsi been after that drop, we are seeing the benchmark that continues to see the pressure. they outperformed their bigger rivals in 2017, and that trend continues. one drag standing out, tell us about that. drugmaker.a bio it has picked up momentum over the last year, outpacing and driving this value. it is expected to do well in europe. with that backdrop, the stock hit a new record this week are outpacedu can see, has hyundai, and it is beating out the numbers reactor, samsung. on thek you so much market preview. we haven't seen prices like this since december of 2014. , the $70 mark, what is behind the crude awakening? charts ono bloomberg oil. >> i like that, crude awakening, not rude awakening. about the u.s. supply of crude down, not one, not two, but eight weeks in a row. we see emerges there with crude supplies and the price of oil rising above the $63 mark. notral reasons for this, just because of falling supply. through thisn year, and it is rising geopolitical risk that some ban

over the last two days, you had the rsi hitting overbought levels.nd then you had a two day down move, the worst for the s&p since june of 2016. joining us is our bloomberg intelligence chief equity strategist. when do we know if the last two days is something more? >> today will be critical. futures are suggesting we will have a positive day. if you get the followthrough, it make investors feel better about the outlook after the last two days. when you know you are in a correction, if you see 2% days, those seem to be a magic trigger. ,hen you get them up or down volatility is rising in the equity market which usually means you are in the midst of a corrective process. so far, a one-person day. 1%one-person day, it did -- day, it did seem consequential. for the 2% dayk and for followthrough on the downside today. a third consecutive day is something we have not seen in a long time. thetrick -- tricky part of equity market is there are no levels, we broke out so far, so fast, there is not a lot to watch for any church. you look for -- in the charts.

it does not mean they cannot go further or it is an rsi issue where they are overbought.alio and larry fink saying there is way too much cash that needs to get deployed. where will that cash go? alix: howard marks said all the easy money has been made. at the 9:00 hour, i will be in place of jonathan ferro. i will be speaking with david lebovitz of jpmorgan. happy friday. david: happy friday. alix: this is bloomberg. ♪ for ourom new york city viewers worldwide, i am alix steel. 30 minutes until the start of trading. this is the countdown to the open. ♪ coming up, coming to america. the president tells the world's elite in davos america is open for business. for itsdollar down biggest losing streak in more than three years. and the u.s. economy growth is lower than projected in the fourth quarter, but there are signals of solid momentum. happy friday. here is where we stand in the markets. s&p futures continue to grind higher by about nine points. the best january since 1997. highero-dollar grinding as well, up three times of 1%. around the highest level since around the h

rsi index versus the major indices. the s&p is the yellow. the purple is european stocks and the white is the global world all in major over but territory. is this going to be a global growth story? are you going to say the word synchronized? >> i think synchronized and kick the can are sure to come up. we can get even more signs that the word of the day is euphoria at bank of america's fund manager survey for january shows that cash levels among fund managers fell to a five-year low. share overweight equities at a two-year high. being these things are reflected in what fund managers are doing and they are chasing performance. bets thatare placing winners will keep winning and that kind of a reflection of your chart. msci world hasn't been at overbought levels like this since 1987. david: we are all feeling really good about ourselves. do the central banks actually deserve all the credit? they have been pumping all of this money into the economy for so long. the question is by the end of the year as central banks are shrinking the balance she

the bottom panel has to do with the rsi, and the green line is where green is oversold.uncing above that. 91.89 is where we sit on the dollar index. did you buy the dollar? >> not really. look, i think it depreciated by about 8% last year. it will not we can buy as much year. the fed is still hiking, if you look at the bond market since the start of the year, the yield is heading higher the.dollar should not follow the yield completely, but the preshow -- pace will be slower. they were talking about bonds are not in the bubble. year will stay0 lower. one, transparency of the fed chair, too, lower volatility of inflation expectations, and 3 -- can the same be said about the weaker dollar? vassili: we would agree with that view. that would imply a relatively flat yield curve, which is what we expect. expectot deepening in the yield curve. but i think that is vertical for the dollar. the two paths were dollar strength -- either we are underestimating the growth impact of the tax reform or some kind of productivity boost, so the endpoint for the fed is higher than we think,

money on the sidelines, we have a lot of technicians say the market is overbought we need to look at rsi on the dow, when you look at the percentage of s&p stocks above their 50-day moving average, all these indicators indicate that the market is overbought, in fact, and then you have fundamental strategists saying there's a lot of money on the sidelines. where do you stand on all this does this all matter >> well, i think there is a lot of money on the sidelines. i don't know if that will really be brought out, though, melissa, until the bond yields start to move and create pain on the fixed income side of the equation in a bigger way and i'm saying in the ten-year yield in particular. and it will be interesting to see where they go with that. i suspect they won't necessarily go to stocks as much as they will just to cash if they start to get paid. so i'm not sure there's going to be a lot more money drawn in to equities in a big way. i do think technically the market is extended and overbought and due for some sort of pause and i really think the pressures are building, as i say, parti

the bottom panel is that rsi. anything over 70 is overbought. are we freaking out about the selloff? >> i don't know if a lot of people are freaking out nor should they be. thing a look at one product that stands out for its i look at the s&p powershares low volatility high dividend. that's one run the above on the wrist spectrum. that had its worst day in over a year. big support for the market has been retail markets buying in. they are pouring into by the high-tech names. wednesday over a quarter of s&p companies by market cab report earnings and that's going to be rubber meets the road. profit-taking for a real genuine connection. alix: earnings revisions for tech is not as high as other sectors because they had a lower effective tax rates. i have to wonder how this is playing into the market. ther expectations that iphone demand didn't hold up. walk me through it. >> it is still a mixed bag. netflix did yesterday. you also had amazon. it's tough to say that the whole space is getting hit. as long as tech earnings hold up obviously that kind

you have a 25, 26 9-day rsi, which means people are concerned about the supply chain cuts.ntastic company, and at these levels also it looks very interesting i think this december quarter is already out there in the price i think the next two quarters are not going to give you a ton of catalysts so i think it's dead money right now. >> all right, so differing opinions there let's move over to boeing, which has had a tremendous 12 months stock up more than 100% in the past year. how important are the results, steve? >> so i think if you look at their recent defeat with bombardier, i think people look at that, is that a reason to sell it? i have owned this stock forever and sold it about 200 points ago. i was dead wrong it can go higher, it will go higher, i think you stay in it >> before we go, tim, mattel set to report this week as well. the 20-year stock draft picks. >> this has been dragging down seymour alpha this entire season i think mattel's story is really about where they have been able to get inventories and control they're trying to grow in the digital ad space i

run, but it's gone vertical in two months it's not a technology stock, but looking at the chart, it's rsitive strength index, it's above 90 it's out of control. never seen anything like it. all-time high by a long way. it's an 8% premium 200 week moving average something reached one other time in the past. again, purely a near term basis. fundamentals look good, infrastructure bill could pass, that's positive as well, but the sto stock could pull back 10% and it's still up. that would be natural, healthy, and i hope it happens because i think if we pull back 5-10%, the stock has more upside down the road go up like this, only lasts so long, and it ends quite badly usual usually. >> michael, do you own it? >> we agree. short term, the stock moved up close to 80% in 12 months, trading a pe of near 120, and long term, we are optimistic with infrastructure spending, everything that's growing in the economy, and if we continue to grow the economy like we do, we would buy on dips. we're lower, like around 150, but we would buy it on a dip if the economy slows down rs thou, look out below >> fal

yes, there's an outside bearish month forming but i think there's some support down here the rsi is below 30. ultimately if it can continue to close on a weekly basis above 16.20, i think it becomes interesting to the long side >> bill and ari, thank you very much bill, a little more optimistic ari says no hope for that chart. for more "trading nation" go to our website at tradingnation.cnbc.com. >>> now the latest from tradingnation.cnbc.com and a word from our sponsor. >> in a losing trade, avoid letting your emotions get the best of you. too often traders want to add to a losing position, but experienced traders will say, your first loss is your best loss in other words, ke ata small loss and move on before it becomes too big. >>> check please i was at the north american bitcoin conference on friday mo levin has been turned into a minor celebrity. take a look, when we walked around on the floor, people taking selfies, like he was a star he said a minister from utah asked him for a discounted entry fee and he says, no, no, no, we don't do religion here listen to what he told me. >> we d

we'll see dow 2 t9,000 by the ed of the year, but rsi is the highest level seen since the dot-com bubbletering the melt up phase. people want to make money, they are exciting, getting on the trump trade, people with hordes of cash on the sidelines are bringing it back short term, all this uncertainty and things that you mentioned do symbol a pullback. that's naturally and technically necessary. if we fall to the 200 day moving average, a 12% correction, i think that's going to be a bit too much, but i think you can -- >> i'm not asking you to call the exact percent of the market decline here >> no, no, not at all. >> talk about the dollar what's going on there? attributable to the weakness >> today, i think that was a pilon factor right? had a weak trend, people crowded leaning against the dollar his comments, essentially were, you know, one of those things where it is what a lot of treasury secretaries think, but this one said, an excuse to get heavier in that direction, but it's not just about that, the fact that the entire world is growing, and when risk appetites around the world are

great stock right now it's very extended you're more than 20% above your 200-day moving average on an rsilso above 70 which suggests it's extended looks very similar to what you'd see back in early 2013, also in early 2016 when you get this far extended, usually there's some setback and a healthy correction that took place. i'm not a fresh money buy in this stock today, brian. >> not a fresh money buy, but, you know, mike, we talk about this name. as you point out, jeff bezos may have literally changed the business model when it comes to running a major corporation. do you feel, though, on a free cash flow metric that the valuation is unreasonable in any way? >> yeah. when i look at this $1800 price target from here, i say it's possible i want to put a clause on there, buyer beware and know how you'll get there. let's do math on freecash flow because that's what he manages the business to. we now think free cash flow will grow 30% out to 2019 at its current price, that's a 33 multiple on free cash flow in 2019 at $1800, that's a 43 times free cash flow multiple on 2019 free cash flow. it

fortune-day rsi, up 17.3 points. levels indicate an asset may be set for perhaps short-term.ly -- a in a palladium rally. a weaker dollar continues to boost alternative investments. inventories and warehouses tracked by nymex shrank last month, capping a fourth straight annual decline. the minor can now operate until june, and indonesia says the extension brings certainty to andorder should negotiation gives the majority of holding in return to operate the project in 2041. the eurasia group has released its annual output for leading global this and says 2018 could be the year of a geopolitical meltdown. mckinseyer has joined us global managing partner for a chat. >> when the global economy feels today, geopolitics do people respond. they see it is a crisis. they know they need to do something. they got to bail things out. i have to do infrastructure projects. they have to get the banks ready. we had that back in 2008. it was a crisis response. the geopolitics are easily as bad today globally as the economics were in 2008. they might be were. and yet, there is no crisis, no se

technical that investors might have to consider when looking at these lofty valuations, the fortune-day rsit territory, but what has kept investors enthusiastic about hong kong shares of late -- energy and property stocks. we want to show you country garden, the best performer today as well as for the year, soaring to a fresh record, adding more chairman, and climbing to a june 2015-at the top of the chinese oil giant pecking order for credit suisse. taking a look at the laggards, .eely is sliding although jeffries is an outlier maintaining its underperform call, pointing to concern over the sustainability of growth. shares dragging not only in hong kong but elsewhere in the region. put your positive hat on. this is an outlier for us. the rest of the region not too good. sophie: not too good. you asked me to put on my positive hat, but what i can show you is yen bulls might or have to be getting a little bit of impetus from the boj to cut super buying, but don't take too much stock because these are boj,y operations from the but despite that, we are seeing a tick up not only in the yen but

dow you say the risk of exiting too early, how do i find the correct to stay in a market where the rsi in 1904? john: you look at what is driving the market and pick apart some of the received wisdom's. you need earnings to drive a market. at the moment, earnings are coming through and being delivered. the outlook for earnings, given the economic momentum, looks good. , allreadth of the market sectors you would expect to be performing across the cyclicals in this phase of the cycle are generally holding up. third, the big elephant in the room, valuations. s&p 500 on forward pe is 18.5 times, over the last 25 years, the average pe is 15.5 so it is expensive to average. the peak is around 24.5. we are well below that and even if we take out the dot-com bubble, the averages 14.9 and the peak is 21. times three price-earnings away from what you would consider an extended valuation. in our view, the conversation of valuations being full but not excessive, earnings momentum being good, and brett being good look to you that this is the time to stick to your guns and stick with the overweight

look at perhaps indicating maybe it's time for a little breather over the next three or four weeks rsibove 80 for the first time since 2017 and ninth time since 1993. maybe a little breathing room. and average drawdown around 10%. it's going to feel like the end the world but that's typical market behavior. it just seems abnormal with the typical low volatility we've seen obviously, we're going to see pullback long-term, i think the trend remains in place >> i'd be surprised if you had a pullback soon. >> aside from volatility last week, nothing's changed. >> well, think about -- >> right, we're just getting in the cusp of earnings season. >> the market is down half a percent, we get all -- we get excited because things are happening. you know, we've become conditioned to things that are happening. >> so, your point, seeing 3% seems -- i can't remember, i think my hair was a little darker last time it moved 3% >> if anything changes is how fast we started off the year, just to come out of the gate at 10%? must seven sessions. >> at the end of month, we've been bullish, but they got to