Are Stocks Oversold?

Posted by Bull Bear Trader | 9/30/2008 01:18:00 PM | , | 0 comments »

According to research by Bespoke Investment Group (see article), 78.8% of the stocks in the S&P 500 were trading more than one standard deviation below their 50-day moving average. On a net basis, 78.2 of the stocks in the index were oversold. In the last 18 years there have only been 36 other days where more than 75% of the stock in the S&P 500 were oversold on a net basis. Nonetheless, this does not indicate that the stock market is ready to reverse long-term given that on many of these occasions any reversals were short-lived (less than one year), and were at times followed by further declines.