Overbought/Oversold
?>
Download eBooks and Software
 Fully Verified Winning System Since 1999 & Vip Club Picks!
Winning Sports Picks & Predictions By Zcodesystem.com - Nhl, Nfl, Mlb And Nba Predictions And Picks From The Best Experts In The Industry + Fully Automated System Proven Since 1999 Awesome Conversion 5.26% And Recurring 60% Commission!
The Lotto Black Book
This Radical Approach To An Online Sales Letter Converts In The 3-5%... We've Never Seen Something Like This Since The Early Days Of 2004-2005 And I'm Sure You Haven't Either... We Convert More Than Our Competition And We Pay Out More... Try It!
Paleo Recipe Book - Brand New Paleo Cookbook
Brand New Paleo Diet Cookbook With Over 370 Recipes. Pays 70% Commission On This High-quality, Easy To Sell Product. Get Banners And Promotional Material At Http://paleorecipebook.com/affiliates.html
Articles > Business and FinanceOverbought/Oversold
by: Albert W. Thomas
Has your broker ever told you that a stock is “overbought” or “oversold”? He probably went on the explain that the stock you own (I hope you didn’t) had gone down so far that it now was oversold and due for a rally. He might also have encouraged you to buy an equal amount to “dollar cost average” your position so that when (“if”- he didn’t say that, I did)) it did go back up you could “get out even”. He might even say you “could make a fortune”.
Waiting to get out even is the great trap that is preached by all the big Maul Street brokerage houses. What is even worse is most brokers and financial planners believe it. What happened to all those beautiful company reports sent to you telling how wonderful this stock was before you bought it. Maybe you better read those back to him. Brokerage companies do not want you to sell.
When any stock is going either up or down for any extended period of time it does seem logical that it can become overbought or oversold, but let’s examine what that means to your ownership.
The reason a stock started up is because the underlying profit projection is going to produce substantial profits that will make the stock more valuable. At some point it is going to reach a true valuation and should stop advancing. What usually happens is it goes beyond true valuation to what could be called overbought (over valued) and then starts down. You may be encouraged to buy when a particular stock becomes “hot” and everyone is buying it. When all the sheep are buying you want to be a seller or you will also be sheared.
Suppose all this was in anticipation of future profits that did not materialize? Then the rise would turn over and head down. This would be more likely for a smaller company than one of the giants, but giants have been toppled. If any fraud was involved the company might even go bankrupt.
Think back to WorldCom that went to the moon and was finally flushed down the sewer. Did it EVER while it was tanking become oversold for a rally? Not hardly because there was no value. Unless you truly understand how to trade overbought and oversold situations the best thing to do is keep your hands in your pockets.
Beauty is in the eye of the beholder. Overbought and oversold is in the mind of the buyer/seller.
About The Author
Copyright 2004 All rights reserved.
Albert W. Thomas Former 17 year exchange member, floor trader and brokerage company owner. F*R*E*E investment letter www.mutualfundmagic.com. Author of best seller "IF IT DOESN'T GO UP, DON'T BUY IT!"
al@mutualfundmagic.com
|
?>
News on Business and Finance
The Business Finance Store Discusses the Effects of Business Credit on Personal Credit
The Business Finance Store discusses some of the potential repercussions of business credit on a business owner’s personal credit.Santa Ana, CA (PRWEB) May 22, 2012 A recent study by Pepperdine University and Dun & Bradstreet Credibility Corp. showed that most small businesses tend to get funding through traditional channels, the Washington Post reported. Seventy-one percent of small business ... The Business Finance Store Discusses Small Business Debt Collection
The Business Finance Store discusses some strategies for small business debt collection.Santa Ana, CA (PRWEB) May 23, 2012 Wonga, a high profile UK-based short-term lender, is being criticized by the British Office of Fair Trading for its debt collection practices, the BBC reported. One such debt collection tactic included suggestion that the debtor committed fraud and would be reported to the ... Budget 2012 - business reaction
Business reaction to Finance Minister Bill English's 2012 Budget: Canadian Business Eyeing Asia, Mexico, Brazil Like Never Before
Yet mood for expansion rests on stable economic growth at homeMISSISSAUGA, ON, May 23, 2012 /CNW/ - Federal Finance Minister Jim Flaherty's persistent coaxing of Canadian business to diversify international ... The Business Finance Store Discusses Business Incubators
The Business Finance Store discusses business incubators and how entrepreneurs can find the right one to develop their ideas into a successful business.Santa Ana, CA (PRWEB) May 20, 2012 Pinterest, the online virtual pin board, raised $100 million in a round of financing this week, The Wall Street Journal reported. The venture-capital funded tech startup is reportedly valued at $1.5 billion ...
|
