"Overbought" and "oversold" are terms thrown around by market analysts. But the truth is that markets often reach what look like extremes and keep right on trucking. That certainly appears to be the case right now in the ES/SPX, which can certainly be classified as "overbought" by several types of momentum measurements. However, whether it will turn here as a result is not a given.
There were three long term bull counts presented in last weekend's update. All three show the ES in a 5th wave of one degree or another as of this juncture. Also, prices are bumping right up against a trendline (blue channel in chart) that has turned the ES back twice in the last couple of years: March, 2012 and May of this year. So the setup is there for a bear strike.
In addition, the pattern since the 4th wave low of Nov 8 shows a pretty clear 5 wave structure up off that low, with the assumed 3rd wave longer than the 1st and alternating waves 2 and 4. However, we are entering a period that has a seasonally upward bias, and the market closed Friday with a fair head of steam. So it is quite possible that this 5th wave is going to extend, in which case the Minute W3 (in green) top on Nov 18 could actually be Micro W1 of an extended Minute W3 with a Micro W2 low on Nov 20. That would allow more price and time space for a continued run.
Haven't discussed the long term bear alternate in quite a while. The push through the ES 1586.75 high of 2007 this last spring put that count in serious question, and as equities have continued there relentless upward trend that "X" wave count has become less and less probable. A fair elimination point would be at ES 1804.25 where the assumed "X" wave is a multiple of 1.236 times the 2007 - 2009 bear market. Friday's high at ES 1803.25 puts the market right at that point. Any significant push past this level pretty much rules out the "X" wave alternate.