Posted To: MBS Commentary
I generally don't l ike the terms "oversold" (consistent weakness) and "overbought" (consistent strength). I think they lead to false confidence in some particular outcome. For instance, there's a tendency to think something must rally if it's been oversold and that it must sell-off if it's been overbought. This is no more true than putting a hyperactive dog on a bungee cord leash and expecting him to go bark through the fence on the east side of the yard simply because he's been stretching the leash to bark through the fence at the west side of the yard. To be more germane for markets the bungee-leashed dog analogy should specify that, over time, the yard in question gets roughly equal distractions walking along the east and west fences. As such, an...(read more)Forward this article via email: Send a copy of this story to someone you know that may want to read it.
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