ONE-TWENTY TWO: Trading Financial Markets
Exploring the poetry in financial markets for students of money and economy since the year 2000.
As I feared might happen, the stock market has already fallen back into oversold territory as measured by the percentage of stocks trading above their 40-day moving averages (DMAs). This indicator, T2108, dipped under 20% and closed at 18.5%. This is the third oversold period in just a month, and this third time is not … Read more
Toyota (TM) filled the headlines of business news for several weeks as it struggled with seemingly unending revelations about its poor product quality. After about a month, sellers finally exhausted themselves, and TM began an impressive bounce. This bounce only lasted the same amount of time as the overall sell-off. TM peaked in late March, … Read more
I spent a lot of time over the past oversold period studying rules and guidelines for trading the (inevitable) bounce out of the selling pressure. The oversold period ended inconclusively, but my rule for buying the ETF for Brazil, iShares MSCI Brazil Index Fund ETF (EWZ), definitively worked for a second time. When EWZ started … Read more
T2108, the percentage of stocks trading above their 50-day moving averages (DMA), hit 21% on Wednesday. This milestone finishes nine days of technically oversold trading conditions as defined by T2108 dropping to 20% or below. I am reposting below a chart of the historical distribution of durations for oversold periods as a reminder that the … Read more
Sellers stepped out of the way today. Although volume was generally low on the major indices, stocks managed large gains that made up for yesterday’s ugly close and much more. In fact, today was the kind of day I was anticipating for yesterday’s trading. Stocks in my listing of potential buy candidates for this oversold … Read more