Stocks for the Rest of Us
Posts tagged overbought
Starting to Get a Little Extended
Jul 23rd
The major indices are starting to get a little extended here. A prudent trader would be taking more gains as the markets continue higher. One thing of note is the trend in declining volume which usually indicates a lack of sponsorship and belief in the rally. If today’s volume ends up being rather high it could indicate a “blow off” top in which the buyers exhaust themselves and the sellers usually take over from that point.
Remember, The Primary Trend Is Still Down
Dec 10th
Be careful getting too excited here as the market rallies. A lot of stocks are up 50% from the lows and anyone who was lucky enough to catch that will definitely be unloading into the strength. If you’re already long you can try and ride the rally as long as possible but if you’re not long then wait for a better entry point. There’s going to be a good bit of resistance here around the 50 day moving average on all the major indices.
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
Wall Street on Vacation Makes For Choppy Trading
Aug 25th
The trading action today was again choppy as most of the big wall street traders are most likely on vacation. Volume was low and the moves were jittery. While the major indices are not overbought they are definitely far from being oversold. Therefore you need to take a defensive posture. I’m still net long but I sold off some energy related stocks such as PBR and SJT last Thursday on the big spike. I continue to hold my XLE long position with a stop around 72.50. Seeing as how we’re not yet oversold I would not initiate any new positions here as the risk at this point is too high.
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
CSCO short
Aug 15th
CSCO could be a good short here. There were a lot of buyers at 25 who want their money back and the stock is definitely looking extended at this point. I think you could short it here for a point or two with a stop at 26 or so. Once the overbought condition is cleared out, we’ll re-evaluate CSCO from the long side if the selling can be contained.
CSCO short
S&P 500 oscillator update
Aug 13th
The S&P 500 oscillator that I use is showing some slight signs of an overbought condition but it’s nothing that a few days of chopping around wouldn’t solve. Other then that it still looks pretty good and we’re only at about 60 on the oscillator.
S&P 500 oscillator