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  • yankeeboy4748 yankeeboy4748 May 18, 2013 3:09 PM Flag

    Extreme over-bought/over-sold indicator

    Going back about 25 years, when the Dow is 1900-2000 points above or below its 200 day moving average, that is a sign that the overvalued or undervalued situation is going to correct or rally.

    At this point the Dow is about 15, 354 and the 200 day moving average is about 13.900. So the Dow is about 1,634 points over the 200 day moving average. It is possible in a couple of weeks the Dow will enter the extreme overbought area, and at that time I will buy a downward ETF . As I said, this indicator has been 100 % accurate for 25 years. That does not mean it will work again, but the odds are that it will be a good time to act.
    I am basing my numbers on a Friday close and that is where the official stats will be relevant. Remember that the 200 day moving average and the Dow changes everyday so you need to keep up with the current average to get a true signal.

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