4 replies to this topic

[LeroyB3]

I have a proprietary overbought/oversold indicator I use from time to time and thought I would share a little analysis that goes along with it this evening. The indicator measures how many S&P 500 stocks are overbought or oversold. The proprietary part is how I measure overbought/oversold. Anywho...as you can see from the chart below at the recent low (Wave A) there were about 300 S&P 500 stocks that were oversold. Those kind of levels are not seen very often and are definitely a good tell that things might stop falling rather soon. So, Wave A has now completed and I think most here are looking for a Wave B top.

Now, when looking at when Wave B might be done we would want to look at the overbought part of the chart located in the bottom pane. The overbought indicator is saying that there are currently only 6 S&P 500 stocks that are overbought. That is why I don't think Wave B is done yet. There has never been a Wave B top when only 6 of the 500 stocks were overbought. Judging from the past as seen on the chart there should be at least 60 to 100 (or so) for there to be a top of some sort...any sort.

We have gone to the 38.2% retracement already. This might be an indication we should start looking at the 50% at around the 1416-1417 level for a Wave B top.


(Click For Larger Version)

This analysis is based off of past experience and past levels and this time could be different, but just thought I would add my two cents to the current debate.

Best,

LB

[Rogerdodger]

Sounds good. What worrys me now is that "everybody" is looking for a retest of the lows to buy.

[dougie]

That is right. that is why me thinks that it is the A wave up that is not yet finished. Then we get B down where everybody loads the boat causing C up before the bottom falls out (in 3 down)

[qqqqtrdr]

I have charts that I look at showing if the bounce is high enough for a reversal downward. This happened on Friday. We always have three waves down so I feel EW definitely shows more downside to come this week. Volume on the rise has been mediocre. Stay tuned, but unless this changes it will be an ugly week..... Best Regards, Barry

[eminimee]

FWIW : I'm looking for 1417ish and look for cumulative breadth to have possibly topped on Friday...so like to see another 15 points being squeezed out while cum. breadth flatlines or turns down from here.

Got to say though...I have a few other things that may imply a top here as well...and if it wasn't opex week...I might be leaning stronger to that side... I'm basically flat being long April spx puts and long futures going into this week. Ideally looking to add to those puts while playing long into 1417/20.

http://stockcharts.com/c-sc/sc?s=$NYAD&p=D&yr=3&mn=0&dy=0&i=p77546769454&a=46505665&r=7268.png

Edited by Teaparty, 11 March 2007 - 11:52 AM.