Chart of the Day: What Oversold Conditions?

JC Parets
September 10, 2022

Have you noticed that stocks aren't getting oversold?

So not only did the new lows list go quiet, since peaking almost 3 months ago, but stocks aren't even seeing oversold readings.

The sellers appear to be exhausted.

We define oversold conditions as a 14-day RSI below 30. It's incredibly informative.

If you think a stock is in an uptrend and it's hitting oversold conditions, then it's probably time to reevaluate that thesis.

In uptrends you see overbought readings (RSI >70), and more importantly, a lack of oversold readings.

Look at the S&P500 not getting oversold at all during the Spring and Summer months:

Also noticed how we even got overbought readings for the first time since Fall of 2021.

And this is just one index. You're seeing the lack of oversold conditions across the board. Go sector by sector, stock by stock. You'll notice that even the worst ones haven't gotten oversold.

Start paying attention. You'll notice.

For us who do this every day, it's really hard to ignore these bullish momentum divergences.

Without new lows and without oversold conditions, it's mathematically impossible for bear markets to continue.

That's why we're buying stocks.

I walk through my favorite trades in this week's Live Premium Conference Call

In this video I lay out exactly what we want to do, how we want to do it, and what it will take to change our minds.

Premium Members Click here for access.

Email me here if you have any questions.

Or give me a call: +1 (323) 421-7910

Cheers,

JC

 

 

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