Oversold? Not yet.
Ironically, I find it slightly easier to spot “overbought” versus “oversold.” As I noted previously, when I get giddy about my trading, the market is usually overbought.
But, how do I feel when the market is oversold? That’s not easy to pin down. I guess the closest I come is “nauseous.” Of course, if I’ve been particularly nimble, I come into a down market relatively flat, so I end up kind of blank.
Therefore, to give me some sort of signal, I just look at individual stocks and start buying when they’re down about 10% from a recent peak. Of course, the “10%” part is easy. But, what’s a recent peak? Generally a high within the past few weeks, but I’ll admit that’s more feel than anything.
Regardless of how I define “recent high” though, the stocks I’m looking at aren’t quite into buy territory. But, they are getting close.