I believe the S&P 500 is due for a rebound rally to 1425 or more from its recent close of 1374.12 on 3/5/07. I believe this rally will occur within the next 8 weeks. My system is indicating extremes in negative sentiment and oversold conditions which should unwind to fuel a rebound rally. As of 3/6/07, I have entered a long position in SPY at 138.85. Position: Long SPY Entry: 138.85 (3/6/07) Exit: Pending System Signal Stop Loss: 124.96 Time Stop: 8 weeks
How come oversold levels work so well, but when a market is overbought like it was for the past 9 months it tends to be ignored.
IF SPY BREAKS 135, next support is at 131. If 131 is broken than I would be running very far away from these markets.
As I stated above on 3/6/07, the S&P 500 would rally to 1425 or more from its close of 1374.12 on 3/5/07 (within 8 weeks). My forecast was correct. The S&P 500 closed at 1435.04 today on 3/21/07. www.yieldsafe.com US stocks post biggest rally in 8 months. http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aq3wvP7nDGhU Update on Position: Long SPY Entry: 138.85 (3/6/07) Current Price: 143.29 (3/21/07) Total Return (including .55 dividend): 3.59%
As I stated above on 3/6/07, the S&P 500 would rally to 1425 or more from its close of 1374.12 on 3/5/07 (within 8 weeks). My forecast on the S&P 500 was correct as the S&P 500 surpassed 1425, reaching a high of 1438.89 on 3/23/07. www.yieldsafe.com As of 3/30/07, I have exited SPY at 142.06 for a profit of 2.71%. Entry: 138.85 3/6/07 Exit: 142.06 3/30/07 Return: 2.71% (including .55 dividend)
great question. I think that you will find it depends on what stage of the economic cycle you are in. the opposite of your statement could have been used in 2002 with a great deal of accuracy. We are still in an overall bull trend with transitionary indicators...therefore, the tendency for the overall market is to go up due to the "groupthink" of its compnents. also keep in mind that "overbought" really depends on your time period right?