Trade Like a Stock Market Wizard: How to Achieve Super Performance in Stocks in Any Market: How to Achieve Superperformance in Stocks in Any Market

by Mark Minervini

Trying to buy oversold conditions and sell overbought conditions as a trading strategy is risky business. Trading with disregard for a strong directional trend will ultimately lead to buying into a precipitous decline. Similarly, buying stocks simply because the P/E is relatively low and selling because the P/E seems too high produces poor results time and time again. Although overbought and oversold conditions as well as high and low P/Es can exist at turning points, stocks can also have extreme high and low readings in a directional fashion just before major advances and declines. Major market declines always plunge to deeply oversold readings, and roaring bull markets storm through early overbought conditions while advancing much farther.