Sunday, July 25, 2010

How overbought are the markets here?

And the answer according to our trusted McClellan Oscillator is, very much indeed. And with that it's time to shut up and let the charts speak for themselves. The overbought levels are marked on the charts.

I know I mention this every time the market reaches overbought or oversold levels but I feel it is my duty to do so for the benefit of any newbie traders out there - do not short the markets just because they are overbought!! An overbought market can easily become "more overbought" and an oversold market can easily become "oversold". Remember, the markets can stay irrational a lot longer than you can stay solvent.

You might ask then, what is the point of determining these overbought/oversold conditions? Well, here is a post I had written sometime back on how to play overbought markets and I hope it will prove to be of some use to you - How to play overbought markets?

Its been quite a busy weekend for me in terms of blogging and here are the posts from this weekend in case you missed any:

Take care and good luck!

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