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Overbought and oversold line

Medium and long term technical analysis tool for studying stock index trend

synonym Overbought and oversold index (overbought and oversold indicators) generally refer to the overbought and oversold line

The overbought and oversold line is also called Overbought and oversold index Its full English name is "Over Bought Over Sold". Like ADR and ADL, it specializes in the medium and long term trend of stock index technical analysis Tools. from Advance-Decline Line The cumulative value of the number of households that can fall from the rise can be calculated as price of stock Line comparison curve, but this comparison has only four groups Permutation and combination , and in the four groups, the index is Tengluo Index There is no special significance for the rise and fall of the same index. Only the phenomenon that the index is the same as the rise and fall index is worth discussing. Therefore, there is often a feeling that there is no place to apply force in practical application, so an analysis method to increase the amplitude of the ADL line is produced - OBOS.

Chinese name: Overbought and oversold line
Foreign name: Over Bought Over Sold

Also called: Overbought and oversold index
computing method: OBOS index of N day
Calculation formula: OBOS (N day)=∑ NA - ∑ NB

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Overbought Oversold Line and Tengluo Index Belong to the analysis of the general trend technical analysis Indicators are mainly used to analyze the rising and falling momentum of the general trend, so that the potential trend of the stock market can be clearly shown. It is a simple way to measure the momentum of the stock market by using statistical principles price of stock The rise and fall data are used as the basis for calculation. OBOS is mainly used to measure the momentum of the general trend. OBOS is a trend analysis indicator, and it is also the relevant difference of the number of ups and downs, so as to understand the strength and trend of the momentum of buying and selling, so as to provide reference for operation.

OBOS calculates the market rise in a certain period, Number of falling stocks (Number of companies) to understand the strength of the trading momentum of the whole market and the future trend.

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Overbought and oversold line

The overbought and oversold indicator OBOS is mainly used to stock market The cumulative difference relationship between the number of ups and downs Market The strength of buying and selling momentum and its future evolution trend can be used as a reference index to study and judge the overbought or oversold area of the stock market. OBOS indicators and ADR index Similarly, it reflects the current stock market by the difference between the number of stocks rising and falling over a period of time Empty The balance of power and strength. Its main purpose is to measure the momentum of the general trend. To some extent, it is an analytical method to increase the amplitude of the ADL line.

The principle of OBOS indicators is mainly based on the assumption that changes in investors' psychology will inevitably make some sensitive when the stock market continues to rise main force The profit taking of institutions will induce the reversal of the general trend. When the general trend continues to decline, it will attract some foresighted institutions to enter the market and trigger an upward rebound. Therefore, when the OBOS index gradually rises and goes beyond the normal level, it means that the buying of the market gradually heats up and eventually leads to Market Overbought Phenomenon. Similarly, when OBOS indicators continue to decline Oversold Phenomenon. For the entire stock market, the OBOS indicators reflect the behavior patterns of some main market forces to some extent. Therefore, in terms of forecast, when the market is moving from bull market to bear market During the transition, OBOS indicators are leading in theory market index Ability; When the market is in a reversal from a bear market to a bull market, the OBOS indicator is slightly behind the defect of the market index in theory, but from another perspective, it can really confirm whether the bull to bear market is effective.

computing method

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Due to different calculation cycles, Overbought Oversold OBOS indicators include many types, such as the OBOS indicators of N days, N weeks, and N months. Although their values are different in calculation, the basic calculation method is the same. Taking daily OBOS indicators as an example, the calculation formula is:

OBOS (N day)=∑ NA - ∑ NB

Where, ∑ NA -- the sum of the number of stock gainers in N days

∑ NB - the sum of the number of stocks falling in N days

N is the selected number of days and the parameter of daily OBOS indicator

From the above calculation formula, we can see that the calculation method of OBOS indicator is very similar to that of ADR indicator. The difference is that the calculation method of OBOS index is to choose the rising and Number of losers The total number is subtracted, and the ADR indicator is to select the two to divide. Choosing to divide or subtract describes the gap between multiple empty methods from two aspects. In essence, there is no major change, but the calculation method and emphasis are different. ADR indicators focus on Both parties The ratio of strength changes, while the OBOS indicator focuses on the strength of both the air and the air Difference change 。

Like the ADR index, the total number of stocks rising and falling in a certain parameter cycle is chosen to avoid misleading judgment due to the special performance of the stock market in a certain period. But different from ADR, OBOS index Multi empty balance The position is 0 instead of 1, that is, when ∑ NA=∑ NB. Generally speaking, the market performance of OBOS varies with the choice of parameters. If the parameter selection is small, the space for OBOS value to change up and down will be large, and the curve will fluctuate violently; If the parameter selection is small, the space for the OBOS value to change up and down is relatively small, and the curve fluctuation is relatively stable. The commonly used parameters in the market are 10, 20, etc. The calculation of OBOS indicators and the selection of research and judgment parameters also play an important role in the research and judgment of OBOS indicators, which will be described in detail in the later research and judgment function.

The simplest calculation method of OBOS value is shown in the table:

one	forty-seven	forty-one	+6	+6
two	forty-nine	nineteen	+30	+36
three	twenty-three	forty-six	-23	+13
four	twelve	sixty-five	-53	-40
five	thirty-three	twenty-nine	+4	-36
six	twenty-nine	thirty-two	-3	-39
seven	forty-four	forty	+4	-35
eight	twenty-seven	fifty	-23	-58
nine	thirty	forty-six	-16	-74
ten	twenty-seven	forty-eight	-21	-95

The above table is the simplest calculation method of OBOS value. Draw the OBOS value on the coordinate map, with time as the abscissa and OBOS value as the ordinate, mark the position of the OBOS value obtained in each calculation cycle on the coordinate line and connect it to form an OBOS curve. because Technical analysis of stock market The OBOS value on the software is automatically generated by the computer. Therefore, investors do not need to calculate by themselves. They are mainly familiar with the OBOS indicators by understanding the calculation process.

Application principle

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(1) The value of OBOS can be positive or negative. When OBOS is positive, the market is in an upward trend, and vice versa.

(2) On the 10th, OBOS has great influence on the general trend leading indicator The function of OBOS is generally ahead of the general trend. The OBOS on the 6th or 24th has little reference value because its fluctuation is too sensitive or too slow.

(3) When OBOS reaches a certain positive value, the general trend is Overbought Stage, you can choose the time to sell. On the contrary, when OBOS reaches a certain negative value Oversold , you can choose the time to buy. The index areas of overbought and oversold in OBOS vary with the number of total shares listed on the market.

(4) OBOS trend is similar to stock index deviation Pay attention to signs of reversal.

(5) OBOS available Trendline Principle. When OBOS breaks through its trend line, be aware of the reversal of the trend at any time.

(6) OBOS can also be developed with the form principle, especially when OBOS goes out of the high-end market M head Or go out of low gear W bottom The decision of buying or selling can be made according to the type principle.

OBOS reflects the general trend of the stock market Individual shares The trend of the stock market does not draw a clear conclusion. Therefore, it can only be used as a reference indicator of the general trend, and will not affect the specific trading of individual stocks.

Research and judgment method

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If investors want to use the OBOS line to analyze the general trend, they must often cooperate Weighted index Daily chart , to comprehensively analyze and judge. The research and judgment methods are as follows:

1. If the weighted index continues to go up and the OBOS line goes down Deviation phenomenon , which means that most small cap stocks have weakened, so the market may tend to be weak.

2. If the OBOS line continues to rise, it means that the number of rising stocks exceeds the number of falling stocks, while the weighted index declines, which means that the market is about to reverse and rise.

It seems that the above two methods of research and judgment are ignored Market Blue chip stock In fact, it is not. The data analyzed and calculated by OBOS line represents the decision of investors. After most investors decide to buy, most stocks will rise. This situation will continue, and the OBOS line will show an upward trend.

It should also be noted that the trend of OBOS line is random and mobile, so it doesn't matter Trend venation It can be found. Therefore, when using this indicator, you cannot deliberately force its trend. Also, this indicator belongs to the category of analysis trend Individual shares Invalid.

Indicator analysis

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Combination of OBOS curve and stock price composite index curve

Like ADL and ADR indicators, OBOS indicators have a leading warning role on the general trend, especially in terms of short-term and medium-term callback or rebound price of stock The composite index curve leads with signs. If the stock price composite index curve and ADR curve appear Deviation phenomenon , it may indicate that the general trend is about to reverse.

1. The OBOS curve continues to rise, while the stock price composite index curve also rises synchronously, which means that Individual shares The ticket market is at the stage of overall rise, and the stock market will maintain an upward trend. The popularity of the market is relatively active, and investors can actively make investment decisions for individual stocks.

2. The continuous decline of the OBOS curve and the simultaneous decline of the stock price composite index curve mean that the entire stock market is in the overall decline stage, the stock market will maintain a downward trend, and the popularity of the market is relatively low. At this time, investors should hold out Mainly.

3. When Market It has gone through a relatively long rise quotation Later, the OBOS curve began to fall down from the high position, while price of stock The composite index curve is still slowly rising, which means that the general trend of the stock market may appear“ macd ”Phenomenon. When the OBOS indicator deviates from the top, it indicates that the whole market is turning from strong to weak, and a round of sharp decline is about to begin. Investors should sell in time Individual shares 。

4. When the market has gone through a long round of decline, the OBOS curve starts to rise from the bottom, while the composite stock index curve continues to fall, which means that the general trend of the stock market may appear“ Bottom deviation ”Phenomenon. When OBOS indicator appears Bottom deviation It indicates that the whole market is beginning to warm up, a round of rebound may start, and investors can batch a small amount Bargain hunting Individual shares.

Shape and trend of OBOS curve

1. OBOS indicators Trend line theory Research and judgment of

(1) When OBOS curve breaks through its long-term Pressure line When, it indicates that Market May change from weak to strong, especially Stock composite index It can be confirmed that the weakness of the overall market has ended and a round of medium-term rise is about to start after the long-term pressure line has been broken up quotation 。

(2) When the OBOS curve falls below its long-term Support line It indicates that the market may turn from strong to weak, especially price of stock When the composite index also starts to break through its long-term support line downward, it can be confirmed that the overall market strength has ended and a medium-term downward trend is about to start.

2. OBOS indicators Morphological theory Research and judgment of

(1) When OBOS curve forms M head at high position or Triple roof Equal top Reversal Patterns It may indicate that the market is turning from strong to weak, and the market is about to fall sharply. If the stock price composite index also appears the same pattern, it can be more confirmed, and its decline can be studied and judged using the M head or triple top pattern theory.

(2) When OBOS curve is in Low order W bottom or Triple bottom When the lower part is inverted, it may indicate that Market From weak to strong, the market is about to rebound upward. If the stock price composite index also appears in the same form, it can be confirmed that Increase It can be judged by W bottom or triple bottom.

(3) Relatively speaking, the high M head or Triple roof The accuracy of judgment is higher than that of W bottom or triple bottom.

Practical Skills

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Bull bear conversion signal

1. When Market It has experienced a round of more than half a year bear market Adjusted decline quotation After that, if the OBOS curve on the 80th day has been consolidated in the area not far below the zero value line for a period of time, once the OBOS curve breaks through the zero value line upwards, and market index The curve has broken through the medium and long-term index upwards average It means that the market has turned from a bear market decline to a bull market rise, and the long-term upward trend of the market has begun, which is the signal of the OBOS indicator from a bear market to a bull market. At this time, investors can buy and sell boldly Individual shares 。

2. When the market has experienced a bull market rise for more than a year, if the OBOS curve has begun to turn down on the zero line, once the OBOS curve has broken through the zero line downward, and the market index curve has broken through the mid - and long-term index averages downward, it means that the market starts from the bull market and ends a long round bear market The market has started, which is the signal of the OBOS indicator from bull market to bear market. At this time, investors should sell all the individual shares they hold in a timely manner.

Bull bear continuous signal

1. When the OBOS curve breaks through the zero line upwards and the reversal trend of the bull market has been confirmed, as long as the OBOS curve always runs above the zero line and at the same time market index The curve also depends on the medium and long-term index average When it runs upward, it means that the market is still in a big bull market, which is a continuous bull market signal sent by the OBOS indicator. At this time, investors mainly Individual shares The choice of buying, selling and holding on the study.

2. When the OBOS curve breaks through the zero line downward, and it has been confirmed that bear market After reversing the trend, as long as the OBOS curve always runs below the zero value line, and the market index curve is also suppressed by the medium - and long-term index moving average, it means that the market is still in a big bear market quotation Among them, this is the signal that the OBOS indicator is still bearish. At this time, investors had better stay out of the stock market and do it occasionally at most Individual shares Of short-term Rebound the market and quickly move in and out. Never buy or sell individual stocks or hold shares blindly

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