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Overbought Stock Levels and Lengths

By Total Trader | Published: 5 May 2009

Investors are worried that the market is set to pull back now that we have reached overbought levels (1 standard deviation above the 50-DMA).  However, markets can stay overbought for long periods of time just as they stayed oversold for months at a time during the most recent bear.  The S&P 500 has now been overbought for ten days in a row.  Since the bear market started in October 2007, the only other streak of consecutive overbought days ended at 15 last May. 

Obbear 

When we look at streaks of overbought days going back to 1928, however, the current 10-day period is nothing but a blip on the screen.  As shown below, there have been thousands of similar or more extreme streaks of overbought days, so just because we’re overbought now doesn’t mean we can’t stay overbought.

1928ob 

Source: Bespoken Research

Related Posts:

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  2. Global Financial Stock Back to Pre-Crisis Levels
  3. Country ETFs Overbought
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  5. S&P 500 Financial Sector Overbought
  6. Price Overbought But Neutral Breadth
  7. Most Overbought ETFs

This entry was posted in Market Reports and tagged Bear Market, Investors, Standard Deviation, Stock Market. Bookmark the permalink. Both comments and trackbacks are currently closed.
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