Info!! How Oversold Are Nosotros Inward The Stock Market?

Hats off to the first-class someecards site for many useful psychological perspectives!

So, inward the spirit of beingness both anxious too well-educated, let's ask:  How oversold are nosotros too what has that meant inward the recent past?

I noticed on the Index Indicators site that nosotros accept fewer than 30% of SPX stocks trading to a higher house their 50-day moving averages.  That is pretty rare for a sub-20 VIX market.

Indeed, going dorsum to 2006, we've exclusively had eleven non-overlapping occasions inward which fewer than 40% of SPX shares accept traded to a higher house their 50-day moving averages during a sub-20 VIX market.  Those dates were:  7/14/06; 3/2/07; 6/3/11; 4/13/12; 6/26/12; 10/24/12; 6/21/13; 8/27/13; 10/9/13; 1/24/14; too 4/11/14.  When nosotros await xx days forward, the cash SPX was upwards ix times, downwards twice for an average hit of 2.98%.

I thus looked at outset fourth dimension occasions inward a calendar month (same non-overlapping criteria) inward which nosotros registered fewer than 30% of stocks trading to a higher house their 50-day moving averages inward a sub-20 VIX market.  It hasn't happened since 2006.  In the by week, however, we've seen ii such readings.

When I extended the search to markets inward which VIX < 22, thus at that topographic point were 7 non-overlapping occasions inward which fewer than 30% of stocks traded to a higher house their 50-day moving averages.  Four were upwards afterwards xx days too 3 were down.  Several of those occasions took house relatively early on inward the procedure of larger marketplace selloffs:  7/22/08; 6/15/11; too 5/14/12.

Buying dips inward marketplace uptrends (low VIX) has to a greater extent than ofttimes than non brought positive returns.  When dips neglect to sustain a bounce, however, it's ane early on sign that markets that are oversold on shorter fourth dimension frames are inward the procedure of becoming oversold on longer ones.  At to the lowest degree alongside honor to sub-20 VIX markets inward recent marketplace history, this marketplace is non exclusively oversold, exactly uniquely so.  

Further Reading:  Tracking Market Strength too Weakness
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