Will,
>>>>>>>>> is it possible for technicals to be so far in the extreme that they actually become a confirmation signal? i ask because isn't it possible to a market to be overbought/oversold for quite sometime and continue to move up/down? <<<<<<<<<<
If you recheck my previous post, I mentioned that my short-term technicals are severely overbought. I try to mention as much as possible, but didnt this time, that short-term is 1-5 days.
My mid/longer-term analysis (30+ days) is just approaching overbought, and has a little more upside. I am mainly a short-term option player, so it is important to make the proper time reference.
My short-term technical breakout/breakdown is a common occurance and averages about 3-5 times per year, and they do imply that the next short-term (1-5 day) cycle should be up or at least form a double top. However, they can also stop on the dime and revers downwards at anytime. I have noticed that after these short-term technical breakouts there is only a 50/50 chance of further movement upwards, since I have noticed that there are about the same amount of occurance where such has led to a more significant pullback on the next short-term cycle - so its a flip of the coin and no real confirmation of anything.
Its a different story with my mid/longer-term analysis. In the last 5 years(did not have data going back further), only once did my mid-term analysis technically breakout and that started around June this year, which led/continued the strong upswing in JULY before the big selloff. So a technical breakout in my mid/longer-term analysis could be a confirmation of a bubble about to burst, but on a statistical basis it is not acceptable since I only saw that happen once since my data is limited to 5 years. On the other hand it has no confirmation that the market will continue up.
Seeya
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