Thread: Bulls and Bears

Michael Metz has been bearish for many years. If he says now is the time to sell, it's probably the perfect time to buy. His forecasting record is not impressive..

Tom,

Thanks so much for your input and insight. Yes I should know better than to listen to those guys! Back in August and September many of them were saying the market was going to drop 20-30% and I waited in vein for it. I finally decided to invest some money (outside of TSP) in February just before the correction. :X Just my lousy luck. I'm a great saver but a terrible invester it looks like.

Tom,

Exactly what does the overbought/oversold indicator measure? Can a stock (or an index) move from overbought to oversold without selling off (say with good earnings)?

Dave

It is all based on price movement. The only way earnings will affect it is if it affects the prices of stocks. The indicator can come down without a sell off, just by staying even or an index going up with declining issues outnumbering advancing issues.

I got this from prophet.net ...
The Overbought/Oversold indicator is calculated by subtracting the number of declining issues from the number of advancing issues and taking a 10-period moving average of this value. Because it uses a moving average the value at the beginning of a data series is not defined until the tenth sample. Readings >200 are considered bearish and readings < -200 are generally considered bullish. When the indicator falls below +200 a sell signal is generated and when the OB/OS indicator rises above -200 a buy signal is generated.

A strange thing happened Friday. The NYSE ob/os indicator actually ticked down even though the index it was up big. It might of had something to do with the 10-day period moving average including some of those down days a couple of weeks ago.

Another thing to keep in mind is that a rising ob/os indicator means the market is strong and sometimes you get big moves after you get overbought (or oversold) like we saw in January. That was one reason why I thought we might see "one more push down" when we were oversold last week.

Hope that made sense.
Tom

We are almost there. After another strong close Monday, I can feel that I am itching to jump in the market, even though I know it is not the right time. That "get in at any cost" feeling isusually a sign we are near a short termtop. I didn't quite feel the pain Fridaybut today'sit's starting to surface.

I'll call this the Tom's Pain Indicator. It's saying maybe another day or two of upward action before it becomes to tough to be out. Then we will get a sell signal.

Those of you also on the sidelines know exactly what I'm talking about.

Tom

More on the overboughht/oversold indicator. Friday the NYSE indicator actually went down and I expect it to go down again today as decliners surprisingly beat advancers both days. Very strange considering how well the NYSEperformed. So this is a case where the ob/os indicator is going down without the market going down. I don't know if this is saying anything about the market's internals but it could be a yellow flag.

Tom, six days of gains for me, when would u get out. i am riding on profits, when its go down would u increase ur percentages

thanks

randy

outside of the tsp, can one invest in the nasdaq? if so what is a good fund, tom u have any ideas or any one else

hopetohititbig wrote:

outside of the tsp, can one invest in the nasdaq? if so what is a good fund, tom u have any ideas or any one else

Here are a couple of ways. Check out the stock symbol QQQ. It tracks the Nasdaq 100. I believe it is like 1/40 th the price of the Nasdaq 100. You would just purchase sahres of QQQ to buy.

There are also mutual funds that do the same. Like ...
http://finance.yahoo.com/q?s=NSQAX&d=t.

hopetohititbig wrote:

Tom, six days of gains for me, when would u get out. i am riding on profits, when its go down would u increase ur percentages

Hi hope -
We just hit the bottom of a pullback on our way to a good year in stocks. You can sit on it and check your account later in the year and probably be happy. If you are looking short term we are no doubt getting very over bought. The chances of a few down days are getting higher. The kicker is, we coming up on some very strong historical days in the market at the end of this week. But that actually burned me at the end of March. I will talk more about that in my comments on Tuesday.

Tom

Looks like the S&P and Wilshire have both started off falling this morning! Glad I pulled out yesterday !

I know, we are still early in the day but could this be the pullback we've been anticipating?

JerBer