I have heard people refer to the market being “overbought” or “oversold” for as long as I have been a student of the markets. To be sure, only one of the two terms has any credibility and that is oversold. While it is possible it is unlikely since the only consideration that a market would really be oversold in is when the cost of a share is zero. That is oversold! That can be contrasted when we consider the term overbought, because in reality the sky is the limit for how high any given stock could potentially rise. So this case can never really occur. So there is no such thing as overbought at all. A lot of types of stock platforms try to tell you the opposite.
I suppose people mean some kind of relative term when they speak in this way. In this manner, “overbought” translates to the market is high (higher than it was before). “Oversold” would translate to mean it is lower than it was before. That is the reasoning why I find the need to insist that I and others why agree to start using a more appropriate termonology. It really actually makes me quite excited to talk about. A revolutionary new concept. From now on I will advocate the use of the words almost to the opposite of the current lexicon being “underbought” and “undersold”. They get tossed around a fair bit places like eminiforecaster.
So what is this “Underbought”? All that this means is that the market has not gone up as much as it will in the future. This means “undersold” occurs when the market has not declined enough to be where it will be at in the future. It’s easy to see when you think about it how theses terms can replace and be a more appropriate alternative to “overbought” and “oversold”.
I want to start a movement of future looking market participants that don’t dwell on the past. Let’s get over it and move on. The fact is the most successful investors in the world are forward looking market participants. They look for where the trend of the market is heading. They are anticipatory investors.