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| In a typical market "overbought" means there's been an excess of buying and good chance market will drop. Whether drop a lot of just a dip and on up--no one knows. It also means the market has gone straight up, or nearly so, for some time and about time for a "correction." Correction equals a drop, big or small. You also have lots of traders setting on good profits from this strong upward movement and they often will take their profits and this will cause price to drop, some or a lot.
Sometimes expressed as: "The market has outdone itsself lately and about time for a correction or pullback or dip. Side note: Sometimes the dips keep dipping !
The reverse is "oversold."
Another expression like overbought or oversold is: "The market is "extended" and due for a correction."
Oh, your other question. You ask since there's a long for every short or a buyer for every seller in the futures markets how does the price go up or down? I think it has to do with the quantity of selling or buying and when either become dominent then the prices get bidded up or down and the faster the bidding and larger the positions the faster the market price goes up or down. Maybe SeniorCitizen can do a better job with this.
Don
Edited by getitdone1 1/3/2008 17:52
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beans in the teens
