Stocks for the Rest of Us
S&P Oscillator Update
S&P 500 Oscillator Updates
S&P 500 Oscillator Update: We’re closer to overbought then oversold
Jul 31st
Although the market can continue to go higher, we’re closer to an overbought condition then an oversold condition so caution is the name of the game.
S&P 500 Oscillator Update
Jul 21st
S&P 500 Oscillator
Although we’re not overbought yet, we’re definitely not oversold. I don’t think you can buy here but I don’t see too much danger in holding. When you start to see the oscillator flatten out and roll over you probably want to start selling. If you have a large long only portfolio then you might want to consider putting on some hedges up here around S&P 950.
S&P Oscillator Update: It’s Time To Lighten Up Into The Rally
Jan 8th
The S&P oscillator is back up to around 80 which historically has always proven to be a short term top. We’ve had a huge move off of the lows and I think it might be time to put on some hedges or take some profits. No one ever loses money taking profits. Originally, I thought that this particular oscillator was only relevant in bull markets. However, looking back at historical data it looks like the oscillator holds up even during a bear market and/or bear-to-bull transition.
S&P Oscillator Is Starting To Look A Little Overbought
Dec 16th
We’re actually starting to creep very slightly into overbought territory on the S&P oscillator that I follow. It’s not terribly overbought but it does warrant caution and I would consider taking some off the table if you were fortunate enough to catch the last bounce. No one ever loses money taking profits.
S&P Oscillator
S&P 500 Oscillator Shows Market Healthier Than In Past Sell Offs
Dec 6th
Here is another way the S&P 500 oscillator can be used which might be helpful. When a market rallies, people often refer to the breadth of the rally to determine how “real” that particular rally might be. A good rally with good breadth is one in which the majority of stocks are rising. A suspect rally with bad breadth might be one in which only the leaders rally, bringing up the major averages but the majority of stocks were actually flat or down.
The particular oscillator that I use looks at the percentage of stocks above there 50 day moving average. What’s most interesting to me is the divergence between the S&P 500 price action and the S&P 500 oscillator during the mid-November sell off. We’ve got stocks starting to climb up above their 50 day moving averages. This divergence says that the market was actually healthier internally during the mid-November sell off then it was during the previous October sell offs. It also says to me that the mid-November sell off was most likely caused by a panic in a relatively narrow scope of the market, not a broad panic like we had in October. While this is relatively bullish and the prospect of a year end rally is enticing, I’m still cautious going forward. Check it out.
S&P 500 Oscillator
S&P 500
S&P Oscillator: Why It Doesn’t Always Work
Nov 28th
The S&P oscillators are great tools, the one in particular that I use is available at stockcharts.com ($spxa50r). However, I’m starting to find that these tools don’t work in extremely emotional environments like the one in which we are currently in. This particular oscillator simply looks at the percentage of stocks above their 50 day moving average in an attempt to gauge an overbought or oversold condition within the S&P 500. Under normal circumstances this works great. When we get to around 80 we’re overbought and one should exercise caution going forward. During a sell-off or correction, the oscillator will dip down to around 20 indicating an extreme oversold condition.
In bear markets when the moving averages start to turn down naturally most stocks are going to be under their 50 day moving averages so you need to adjust your point of reference on the scale. Furthermore, emotions tend to be extreme in bear markets so while a reading of 20 used to indicate an oversold condition chances are that the markets ability to become MORE oversold will be greater.
S&P 500 Oscillator Update
Oct 8th
The market is so ridiculously oversold that it doesn’t even really matter anymore. I don’t think the chart has ever looked like this. If you’ve got a longer term time line (5+ years) now is the time to start inching into the market. I’ve personally been buying stocks for my IRA as the market has come down significantly in the past few days. If you’re trading in a taxable account then make sure you’re only using money that you won’t need for at LEAST 5 years. My gut feeling is that we’re setting up for a fairly decent thousand point rally on the DOW but it’s going to be fast and furious so unless you’re a day trader I would continue to sit on the sidelines until the charts start building a better base.
S P 500 oscillator
S&P Oscillator Update: Overbought Condition Has Been Relieved
Sep 7th
Doing a quick check here on my favorite S&P Oscillator (favorite because it’s free) it looks like the slightly overbought condition we were experiencing has been relieved. As you can see the oscillator has pulled back which, although it feels terrible, is actually a good thing. With the Fannie/Freddie news that came out today we can probably expect to see a fairly decent sized rally in some of the financials that could go on for several days rallying the S&P 500. I’ll be keeping an eye on this indicator, when it start getting back up towards 80, that’s when you want to start selling into rallies. For now, I THINK we’re going to enjoy a bit of a rally for the next few days.
S&P Oscillator
Free S&P 500 Oscillator Update
Aug 28th
As you know I like to follow the free stockcharts.com S&P 500 Oscillator to gauge overbought or oversold conditions. As you can see we’re still stuck in this consolidation pattern after the huge run we had in July. Although the action may not feel good this is actually fairly healthy. We had a huge move off the lows and a little consolidation of those gains is good. The key is that the selling be contained which so far has been the case. The markets are showing strength today and I still think we’ve got some upside left to the low 1300s or so before I’d start taking profits.
S&P 500 Oscillator
S&P 500 Oscillator still bullish
Aug 19th
The action feels horrible but the S&P 500 oscillator I follow is still bullish. As you can see on the weekly we’ve had a huge move off the lows and I think we may just be consolidating a little bit before another small leg up to around 80 or so before we really have to worry about being overbought. MACD is still bullish and the recent sell off has alleviated the short term overbought condition. I would continue to remain long with fairly tight stops. we’ve got some light trading going on out there so the action is going to be very volatile.
S&P 500 oscillator