Major Oversold Conditions

By Lawrence G. McMillan

We have detailed many oversold conditions in the last two months, and in this article we’re going to look at a couple that haven’t been previously discussed.  They are 1) the frequency of “90% days” and 2) Composite Implied Volatility (CIV) above 90%.  Furthermore, we’ll review other general oversold conditions as well. 

These fit in with our broader view of the market – that a significant bottom will be made in October.  The question remains as to whether or not that bottom has already been made, or if there is to be another test (and possible violation) of the lows.  This discussion will also lead into the next article, which describes the October Seasonal Trade – a trade we often establish annually.  It is just two weeks away.

Read the entire Major Oversold Conditions article (published on 10/14/11) by subscribing to The Option Strategist Newsletter.