Replies to post #880 on S2 Option Trader

[SyndicateTwo]

Fish, and everyone else, WATCH THIS CHART CLOSELY!

This clearly gives you top/oversold signals almost to perfection. After all, what is 'overbought' or 'oversold'? Just extremes on an indicator? No,what extreme means in market terms is when too many stocks have too much interest or not enough. Since price is king, not an indicator reading, the more stocks of the SPX are trading as a whole over their 50day MAs or under as a whole, the more likely you are setting up an entire index reversal the other way. Since most stocks will have over 70% of their moves trade in the direction of the entire index (due to program trading), you only want to bet against the market direction when you get over 80% or under 20% of the entire SPX 500 stocks trading under/over their 50s.