Before last month we had gotten used to the Dow around 12,500. But that changed when August came as the market lost 15% of that figure. People panicked and sold as the Overbought Oversold Oscillator said don’t sell, buy.
Then the market came back to life. Before the month had even finished. I knew the market would come back. Come back some anyway. The Overbought Oversold Oscillator was screaming “buy stocks!” when the market was around its lows.
Take a look at the two charts on the right. Had you been watching the Oscillator and not the Dow, you would have seen the Oscillator goes back-and-forth like a heart monitor. Anyone with common sense could see this would bounce back.
I don’t think a lot of people pay attention to the Oscillator, and its a good judge of character. Buy stocks when the Oscillator is low and you can sell them when its high. Its so simple, yet small investors let their emotions get the best of them, and do the wrong thing at the right time.
