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Strategies & Market Trends : TA Science Projects & Experimental Indicators -- Ignore unavailable to you. Want to Upgrade?

To: ftth who wrote (154)	6/2/1998 12:13:00 AM
From: HeyRainier	Respond to of 237

Holy cow Dave, that link on float analysis is just what the doctor ordered! I just printed it out, and will analyze it tonight. It's exciting to see that the concept of float has validity in other respects, though at first glance it appears that the authors did not make an attempt to apply it for a shorter term identification of overbought/oversold states. I will look over again at the Trend Delineated Volume piece on post #27, and see if it makes more sense this time around since I appear to be moving to the same page as you. By the way, the person who didn't believe in overbought/oversold indicators is none other than William O'Neil himself. I just found it again in Market Wizards. I think there was someone else who mentioned this, and I will try to find out. Regards, Rainier

To: ftth who wrote (154)	6/2/1998 11:08:00 AM
From: HeyRainier	Read Replies (1) \| Respond to of 237

At the expense of looking silly, I want to go back to the basics and first try to identify what the true meaning of "overbought" or "oversold" really is. What does it mean to have an issue overbought? What does it mean to have an issue oversold? Many people will probably have different answers that will revolve around a central concept. For the general consensus, it appears to mean that an "overbought" state is one where the price has gotten too high. What does that really mean? For many stocks, prices usually go even higher. Buy high, sell higher. The problem is, if there's continued demand for that price, regardless of its height, that issue is still going to move higher. That's William O'Neil's style (buy high, sell even higher), along with a number of other investors who have found much success in the market. Shouldn't a truly "overbought" state be better defined as "a condition where all the potential buyers at that price range per given time period, have already made their purchases such that no further demand exists at that price?" If there are no more buyers, then that really means it's been as bought as possible, right? In other words, overbought? And vice versa for oversold. If this definition of overbought/oversold is agreeable, what then is our next step? I think the following factors will be necessary for a more complete picture: volume, momentum, perhaps float analysis here would also help, and a couple more factors. What factors are those? Regards, Rainier