Oversold Indicatorsby Danny on July 7th, 2008 at 6:00:48 pm |
I use these oscillators, along with the iBC Machine, to gauge market sentiment. Right now it is about as negative as it gets.
Fly made a wise choice covering most of his shit today, as it looks like a bounce is imminent. It may be a washout day, then bounce, or just bounce, but in either case, it would be hard for these indicators to go much lower.
For instance, the number of stocks in the market trading above their 40-day MA is 8%. Think about that. What’s it gonna do, go to zero? To my knowledge, that has never once happened.
Another indicator is the McClellan Oscillator. What one indicator misses, the other will highlight.
And Finally, this is one of the iBC Machine overbought/oversold indicators. Though this chart is from Friday, you can see the spike down correlates to previous bounces. Interestingly, you can see that this indicator never got too negative, prior to August 2007, which is proof that that is when the bear market really began.
The problem is, there’s nothing to buy, everything’s crap. So you think the decision here should be go cash and let things sort out?
July 7th, 2008 at 7:17:17 pmEverything is crap, I agree, but I’m looking for tradable bounces here.
One thing I believe it that it’s never different this time. This credit crisis isn’t the end of life as we know it.
I’ve highlighted that it may be time to grab your balls and buy some beta for a trade, since, probability speaking, the market “won’t go much lower” in the immediate term.
Then again, there is IMB, so who knows what tomorrow will bring.
July 7th, 2008 at 8:09:01 pmAnother sign that we may be near a bottom is the fact that CNBC was yammering about the “bear market” all day today…
-DT
July 7th, 2008 at 8:09:20 pmwe need a spark to ignite a rally. even a small one.
looking at earnings:
AA - probably bad news; any good news may help
MAR - probably bad news about occupancy trends
GE - probably flat, but if they do anything right, that’s a catalyst
MTL - they could probably give an idea about steel demand globally, but i think steel demand is peaking, and i think prices can’t maintain the absurd levels they’re at right now. NUE next week, i believe.
COL - find out if people are still buying shit for planes, since HON isn’t until next week.
July 7th, 2008 at 8:16:01 pmhaha, DT, i was thinking the same thing. lol
July 7th, 2008 at 8:16:38 pmAris, GE could do it, AA, MAR, those are all good tells. It doesn’t even have to be ‘real’ to cause a bounce, a la HRB being up today.
DT - CNBC is a contrarian indicator. But, even when the market is bullish, and doing well, they are still gay. So that’s like a reverse double indicator.
Market good = cnbc gay
July 7th, 2008 at 8:31:13 pmmarket bad = cnbc contrarian indicator
cnbc contrarian indicator = cnbc gay
therefore,
can the cnbc indicator be trusted?
We’ve been pretty oversold for about a week now. Nobody thinks we need a little more of a washout with some panic selling to totally exhaust the selling and allow a nice bounce to happen? I just keep thinking if we don’t get that, any bounce is going to be a one or two day event, and that’s it. I realize though we rarely get what we want on Wall Street. Just my two cents.
July 7th, 2008 at 9:00:59 pmFly made a wise choice covering most of his shit today, as it looks like a bounce is
eminentimminent.Maybe. But two things:
1) The $BKX is not done yet, not even close.
2) People are still buying techs and oil services. They need to finally give that shit up.
3) The $VIX hasn’t even broken 30 yet. Complaceny will mark the bottom? Really?
Okay, that was three things. Sue me.
_
July 7th, 2008 at 9:21:37 pmyeah that’s a bad typo
well the slow drip is fine. It’s what has been happening,viz low VIX, but, since when do things move in a straight line?
MAC - That IS what I think will be necessary to get a nice bounce.
July 7th, 2008 at 9:48:37 pmMeanwhile I spelled complacency wrong. Duh.
I don’t think things travel in a straight line. But the COT is selling into weakness — that’s highly unusual. I think we need a “punch in the stomach day” before we bounce.
July 7th, 2008 at 10:29:02 pmi agree with you, jake - tech and energy need to get beheaded before we can stage a rally with any substance.
i do wonder if we’ll get some kind of short cover rally into friday, since there are some big names reporting next week.
July 7th, 2008 at 11:07:46 pmYous guys forgot to mention that oil rolling over or at least heading southward may be the biggest catalyst of all! Stockmarkets world-wide are in a bear for the last 6-9 months, stock market is a strong indicator where economies are going. Recessions slow demand for everything or at least give the impression that demand (in this case oil) is slowing. As Danny said we are not going to Zero and folks are praying for oil to come down, so markets can rally again. Is this wishful thinking or a good possible scenario? And so, how would you play this?
July 7th, 2008 at 11:17:23 pmi may buy the DUG tomorrow. i should have bought it wed.
mainly because stocks like COP, OXY, XOM, CVX, SLB, etc., are looking terrible.
July 8th, 2008 at 12:33:21 am[...] you buy Danny’s indicators (including the fabled ibc time machine) yet, you have had your mustache punched off several times [...]
July 8th, 2008 at 2:11:33 amas i suspected, the DUG is already up 2% in the pre-market.
this is what i get for waiting. >:(
July 8th, 2008 at 9:27:40 am[...] Via Stock Picks and Discussion at iBankCoin.com: [...]
July 10th, 2008 at 4:51:41 pm