Coming into April I envisioned a rally into expiration that led to extreme bullish sentiment. Following that rally I thought we would see a meaty correction. Instead we saw a correction during this normally seasonally strong period that has turned sentiment negative. As a result I believe that we will now see a two way market.
I am a big fan of two way market as I prefer to buy weakness and sell strength. I believe this will be a good strategy for the next few months. Right now we are closer to being oversold so I am positioned on the long side. As the market becomes overbought I plan to trim positions.
3 comments:
What is your definition of "oversold" and "overbought"?
I use the 10 day moving average of the NYSE Advance-Decline line. The next time we will have a chance to be overbought is in a week.
[...] As I wrote yesterday I believe we are in a trading market, where one can buy oversold and sell overbought. The market will not be overbought until the end of the day on Tuesday. This also happens to coincide with the end of strong seasonality. If we rallied through that period it would likely be a decent place to make some sales. [...]
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