Well Lyle, your querry "To put it a bit differently, what indicators do not read oversold at this time?" the answer for most stocks is straight forward.
The shorter term you look, the more oversold...
The longer term you look, the more overbought..
Always look at longer term charts.. two years or more. Is the stock still within its upward trending channel even though it may have had a short term setback.
An easy way to determin that (and there are many), is to calculate a linear regression line going back three or more years. Then copy the slope of that line to the upper resistance (selloff tops), and do another parallel line roughly connecting the supports (buyback areas). This will give you 3 lines.
Do the same with only the last year, then the last three months. Each successively shorter time frame should give some sense of where you are relative to the expectations of other investors.
*** Moving averages and regression time periods really only help focus attention on the short and long term memory of where investors think the stock price ought to be ***
For example IBM over three years gives 155, 140, 120 approximately. The current price of 143 is about midway in the three year trend. The six month trend numbers are 175, 160, 140__ we are at the low end of the last six months' trend. This gives some idea of who's worrying about their stock price, certainly the people who bought above 140, but not the people who bought early last year between 90 and 125.
Doing the three year regression with the SP500 gives an upper resistance of about 775, which we are above! and heading down towards. Middle of the road is 750 and low is 710 area. For the big caps overall one could argue we are coming back to the upper end of high line resistance in a three year trend. Certainly not oversold. 775 is about mid-trend for one year... probably where we'll get a pause.
Jim |
