False Negative on The Stochastic Indicator

By | April 4, 2016

The stochastic oscillator on the daily S&P 500 chart, which has served so well for so long, gave a sell signal last week. Price action paid no attention and the index has since moved higher. This is the first failed signal in over ten positive and negative signals. At this point, other than the recent one day dip, the index has remained in an overbought condition since the February 11th bullish cross. This is a perfect example of how bounded indicators can stay overbought or oversold for extended periods of time.


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