Overbought/Oversold [OB/OS]

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The Overbought/Oversold function determines the momentum of the market by calculating a moving average of the difference between the advancing and declining issues. Parameters ------------------ Advancing Issues     The number of issues (securities) that closed above their opening price. Declining Issues       The number of issues (securities) that closed below their opening price. Note that while this function is intended for use with these specific values, any values can be used for these parameters, including preprocessed values or values for a subset of the market. Indicator Value ------------------------ The Overbought/Oversold indicator is calculated by subtracting the number of declining issues from the number of advancing issues and taking a 10-period moving average of this value. Since it uses a moving average, the value at the beginning of a data series is not defined until the tenth sample. Usage ----------- The Overbought/Oversold indicator is useful for determining the momentum of the market. A value above zero is generated when more stocks are advancing (increasing in price) than declining. A value below zero is generated when more stocks are decreasing in price. The Overbought/Oversold indicator is primarily used for detecting the overbought/oversold level of the market. Extremely high values may indicate that the market is becoming overbought, meaning that a sell-off may occur in the near future causing prices to drop. Likewise, extremely low values can indicate that the market is becoming oversold. In general, broad market indicators can be used for trading against broad market indices through options, futures, and mutual funds. They can also be used to increase the effectiveness of more specific signals by adding confirmation or warning of upcoming trends. Source ------------ This indicator is based on an entry in "Technical Analysis From A To Z" by Steven B. Achelis.