Registered User
Joined: 12/21/2004
Posts: 902
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I've been recently using the Worden Market Indicator T2114 - Percentage of stocks trading 1 channel below their 40-day moving average as a market overbought/oversold indicator. It makes best sense to me as a 3day chart. What is interesting is that the market as a whole tends to oscillate between oversold and overbought conditions, but rarely changes direction until it reaches oversold or overbought territory. Right now, I'm showing the value to be well under 10% - meaning the market is overbought, meaning that any rally from here just won't have any legs (i.e., if the value was around 30 and heading south I'd say "go for it"). Therefore I fully expect things to turn around at the next logical technical resistance point (I pick S&P 1150 for this).
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Registered User
Joined: 9/25/2007
Posts: 1,506
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Interesting ...
I also noticed that we are in a period of progressively declining tops ... which in the past has seemed indicative of a slightly downward sloping sideways market ... similar to 2005 ...
Which culminated in a respectible rally ...
I refer to the T2118 religously ...
In fact ... for my 401(k) ... I only make about (4) position trades/year ... and use the relative position of the T2118 to help guage the time frames for those trades ...
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