“When the ’80s come back” in style, we’ll be ready. But, not the ’80s you’re thinking of. Our 80’s research gave us clues to an overbought market. That tends to happen after our ratio jumps above 80%.
A few short weeks ago we were decidedly bullish on the markets. You can see the post here (Fishing For Buyer’s In A Seller’s Pond). In it, we outlined findings that led us to believe the worst was behind us for the markets. You can see that the ratio was very depressed at 36%. But, today is a new day. Below you can see that the ratio shot up to 72%…so, what’s next?
Above we’ve circled a few areas. These are the times when the ratio started declining. That’s what we are watching for once we break into overbought (80%+).
Is this something to be worried about? No. The 80s is just an alert that the ratio will likely dictate when it’s time to pullback. We look at potential pullbacks as a great time to go shopping for great stocks on sale.
Bottom line: the 80s are great to look back on. Be prepared when we get overbought. Our readers can expect a special update once we break this level.