The stock market has entered extreme overbought levels, with nine out of ten S&P 500 sectors trading within 2 percent of that level, according to a research note by Birinyi Associates.
Using a sector-timing model, the market research and money management firm determines absolute overbought or oversold pricing levels to determine entry and exit points.
"Currently the S&P 500 is 5.15 percent above the top end of its trading envelope, which is the highest it has been in the past year. We consider anything within 2 percent of that level extremely overbought," says Kevin Pleines, equity market analyst at Birinyi Associates.
The S&P 500 is up 13.5 percent so far this month, on track for its best monthly performance since January 1987, while the Dow is poised for its best point-gain ever, up 1,295 points or 11.9 percent.