Anyone ever take notice that when a market is down a couple of days in a row by 1 or 2 % nearly all the talking heads and articles suggest markets are over sold, but when markets rally for weeks, months and years they are never overbought ......its only after the fact that after a sell off that all the fund managers say yea markets were overbought and due for a correction until then they will never say a market is overbought but super quick to scream they are oversold in as little as a few hrs of a minor pullback.
There’s no such thing as overbought or oversold — that’s just noise. The stock market is a roller coaster: the market is the tracks, and we’re just strapped in for the ride.
Stock Indices are rigged to the upside, so it doesn't pay well to short rallies, pays better to buy the dips. Overbought is mostly a worthless indicator for stock indices except in rare cases, while oversold is often a good time to think about BTFD. Only 3 down years in the last 20, not many chances to sell the rips compared to buying the dips. 2024 +25.02 2023 +26.29 2022 -18.11 2021 +28.71 2020 +18.40 2019 +31.49 2018 -4.38 2017 +21.83 2016 +11.96 2015 +1.38 2014 +13.69 2013 +32.39 2012 +16.00 2011 +2.11 2010 +15.06 2009 +26.46 2008 -37.00 2007 +5.49 2006 +15.79 2005 +4.91
The easiest way to understand it is through the default human nature of optimism. Depressed people are anomalies most are optimists. That is exactly how the markets are. Just as @Businessman stated there have been 3 down years out of the last 20. I come from a math background and when I started trading I was confused by the use of the word Volatility. In Wall Street speak it is a euphemism for the market is going down, however that is not what the word actually means. I'm pretty sure the word volatility is just a synonym for the math concept of standard deviation. In science standard deviation goes both ways but in finance it just means downward standard deviation. Of course there are countries where for long periods of time the markets keep going down but that is largely down to poor fiscal policy. ZIRP forever or hyperinflation.