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Percent Oversold to Overbought Stocks - Market Breadh Indicator

by Brian Brown, 3390 days ago
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A stock is said to be overbought if it moved up too far and oversold if it moved down too far.

When the stock or market is overbought, the technical analyst and trader will likely sell its position(s) and if the stock or market is oversold, he/she will likely buy a new position(s).

Overbought and oversold stocks can be measured by many indicators. Each one will have its own interpretation and its own overbought and oversold levels. The most popular technical analysis indicator that measures the overbought and oversold levels is the RSI or the Relative Strength Index. Traders usually consider that are stock is oversold if its relative strength index value falls below 30 and is overbought if its relative strength index value rises above 70.

This is the interpretation of the majority of traders; many other traders use the RSI as a contrarian indicator and therefore have another view of the overbought/oversold levels.

The Percent overbought to oversold Market Breadth Indicator calculates the number of stocks that are oversold (Stocks whose share price is lower than 30) and divides the result by the number of stocks that are overbought (Stocks whose share price is higher than 70). The 70/30 threshold levels can be easily updated and several variations of this market breadth indicator can be created just by modifying these overbought/oversold thresholds.

The higher the percent of overbought to oversold stocks indicator value is the more stocks are currently oversold compared to overbought stocks. This is can be interpreted as a bullish signal by many traders, and a bearish signal by contrarian traders.

The ticker symbol of this Composite/Market Breadth Indicator is "RSI_70-30".




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Type: Composite Index

Object ID: 661


Country:
All

Market: Stock Market

Style:
Technical Analysis

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