ETF Overbought/Oversold Indicator (ETFs: ICF, IYR, RKH)

Below is a tool we frequently use to get a gauge on the market as well as stock timing. Basically, this shows a stock or index's trading range on a line so we can look at many at once and see which ones stand out. The explanation key at the top will help in reading the charts.

We have highlighted some of the US ETFs that currently look interesting. ETFs which are currently below their normal trading range (green arrow to the left of the thick brown line) are considered oversold, while stocks which are currently above their trading range (green arrow to the right of thick brown line) are considered overbought [click to enlarge]:

Comments

[Internet2k4:]

An interesting graphic. As I check the most obviously "oversold" products as shown above, I find OIH and SWH line up pretty well with oscillators I would normally check for entry and exit points, while HHH does not (as well as having a negative 50 day trend). I see that OIH's defined "trading range" is all the way over into the "theoretical low", while both HHH and SWH currently sit outside their trading ranges. I get some comfort from historical charts that suggest whether a particular tool offered a reliable signal for a particular product in the past - would be interested in how this has checked out over time.

2006 Feb 24 09:54 AM