Seems to be quite a few choices for determining if something is overbought/oversold. What do you guys prefer and why?
Lisa,
By ‘MFI’, I’m guessing you meant the ‘Money Flow Index’, which – to quote from StockChart’s Chart School-- is “A volume-weighted version of RSI that shows shifts is buying and selling pressure.” There are plenty of other indicators that combine ‘price’ and ‘volume’ to suggest whether stocks are under accumulation or distribution, which is a different thing than --though related to-- “over-bought/over-sold.”
My suggestion is to go to your favorite charting site. Build a chart, apply every indicator in their menu several at a time, and then choose the ones that you think are providing the signals they should be providing. Swap in a different stock and see if your choices still make sense. Keep swapping in stocks until you find a set of indicators and parameters that does a good enough job, most of the time, which is as good as it’s going to get, because nothing works all of the time.
The choice of indicators is as much a matter of aesthetics as utility. So pick whatever you want and then learn their nuances.
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Oh I see. I will try experimenting with them like you suggest. Thanks!