Wednesday, August 03, 2011

Birinyi Stocks Wildly Oversold

The seven-day slide that wiped out the 2011 gain in the Standard and Poor’s 500 Index is no reason to sell stocks, according to investors including Laszlo Birinyi and Barton Biggs.

By Bob DeMarco
All American Investor

The stock market is wildly oversold, according to a new note from Birinyi Research.

Three indicators on the Birinyi dashboard — the S&P 500′s 10-day advance/decline line, the S&P’s spread over its 50-day moving average, and the five-day average of the CBOE put/call ratio — are all signaling the market’s selloff has gone too far.

And almost all of the S&P sectors, excluding tech and financials, are at “absolute buy” levels, according to Birinyi. This is based on how much each sector has swung from its 50-day moving average.

“For those looking for an entry point, some of our timing indicators are indicating that the market is at extreme levels,” analyst Jeffrey Yale Rubin wrote.

Of course, the market seemed pretty oversold this morning, and it only got oversold-er. But a bounce certainly seems to be due.

Source Market Beat

Also see;

Birinyi Joins Biggs to Say Hold Onto Stocks After S&P 500 Erases 2011 Gain

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Original content Bob DeMarco, All American Investor