Market Notes: Are We Oversold?

I am still finding this market tough to trade. I have no problem trading in bear markets, but my issue right now is that we are oversold, but not that oversold. So it’s tough to initiate longs or shorts. If I do decide to trade, it will most likely be with an even distribution of longs and shorts.

Take a look at the chart below. It shows the percentage of S & P 500 stocks above their 50 day moving averages (I usually use Telechart’s T2108 indicator, but I am away from my laptop), and is currently hitting oversold territory at 20. However, the last selloff reached all the way down to around 5. While it might be prudent to take on a few small pilot long positions, I wouldn’t make any big plays just yet.

4 thoughts on “Market Notes: Are We Oversold?

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  1. A serious suggestion, don’t try to bottom pick this market because you will get burn in the long term. We are in a bear market…leading stocks have lost their momentum, GOOG, AAPL, MOS, POT, TNH. The market will trade lower for the year with few upside days, but it will still head lower. Look at the overall economy and financial conditions. There is something big going on and news reporters are not realizing or talking about it.Marketguru

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