Market Reaction to Standard & Poor's US DOWNGRADE?
- Thread starter shortie
- Start date
Luckily for the bulls, the holy grail indicator has just signaled BUY:
Looking at past examples from his report, it seems when more than 80 percent of NYSE stocks fall below their 200-day average, the market is close to being oversold.
"Extreme readings in this indicator (so far) have a perfect record with respect to market rallies both two weeks and three months later," wrote WJB Capital's Roque, a respected staple of the technical analysis community, in a note. "We still think this market has issues, notably with the industrial sector, but we're putting our trust in this indicator/data near term."
The analyst cited seven other occurrences besides today since 1994 where the percentage of stocks below their respective 200-day moving averages reached such an extreme.
Two weeks and three months later, the S&P 500 has been positive every time hitting the oversold trigger, with gains averaging 5.3 percent and 15 percent respectively.
http://www.cnbc.com/id/44038676
Looking at past examples from his report, it seems when more than 80 percent of NYSE stocks fall below their 200-day average, the market is close to being oversold.
"Extreme readings in this indicator (so far) have a perfect record with respect to market rallies both two weeks and three months later," wrote WJB Capital's Roque, a respected staple of the technical analysis community, in a note. "We still think this market has issues, notably with the industrial sector, but we're putting our trust in this indicator/data near term."
The analyst cited seven other occurrences besides today since 1994 where the percentage of stocks below their respective 200-day moving averages reached such an extreme.
Two weeks and three months later, the S&P 500 has been positive every time hitting the oversold trigger, with gains averaging 5.3 percent and 15 percent respectively.
http://www.cnbc.com/id/44038676
This is post facto curve fitting at its worst. Unless there is a way to predict what the extreme will actually be, following that advice with meaningful amounts of capital WILL wipe out the trader.
Completely irresponsible reportage.
the problem is that there have only been 7 occurrences and it is likely curve-fitted. if you loosen up the parameters i bet you will still get good #s with this indicator but not 100% win rate of course.
the indicator as presented is an alternative measure of the extreme oversold level that we have reached. pretty much everything else is screaming buy! buy! (if one subscribes to the reversion-to-mean)
are we guaranteed to go up? no. but the odds are that we could bounce from here barring some new bad news.
the downgrade is real. it did not just come out of the blue. the bad news is that S&P is a US company and probably delayed the downgrade is long as it could. in other words, if anything, the situation with US creditworthiness is probably WORSE than AA+.
S&P did mess up the numbers and this has become the point of attack by the treasury. but the fact remains that S&P adjusted for the error and still said that US is in a sh*thole.
the other agencies will be downgrading soon...
S&P did mess up the numbers and this has become the point of attack by the treasury. but the fact remains that S&P adjusted for the error and still said that US is in a sh*thole.
the other agencies will be downgrading soon...