Not Maximum Oversold

I hope that we are returning to a more normal market, where the market is once again a two way street. In that type of market oversold and overbought readings should be much more valuable.

In the ultra short term the market is oversold, as 3 of the past 4 days have been down pretty hard. My favorite measure of oversold is the 10 day moving average of the NYSE A/D Line. On that basis the market will not be maximum oversold until late next week. If we were to head lower over the next week we would be maximum oversold  right at the turn of the month.That setup would offer  offer a decent long side opportunity.

2 comments:

caveman said...

So do you calculate this nyse 10 day moving average manually or is it easily accesible on Yahoo finance or something like that?

Tsachy Mishal said...

I do a manual calculation. Even if you could get a chart, the manual calculation is more valuable. The reason is that the numbers that are being dropped from the calculation are very important.

For instance if you have a period where 8 out of the past ten days have been negative, that would get the market maximum oversold. That can only be seen by looking at the raw data and not the level of the chart.