Probably since the day the markets opened people have been talking about them being either “overbought” or “undersold”. To be sure, only one of the two terms has any credibility and that is oversold. While it is possible it is unlikely since the only consideration that a market would really be oversold in is when the cost of a share is zero. That is oversold! Unfortunately, for those who wish to use the term “overbought”, it is important to note that the market has unlimited upside potential. Because a stock could never reach a price of infinity it can’t really happen. So there is no such thing as overbought at all. A lot of types of stock platforms try to tell you the opposite.

To give people credit, I know what they are talking about when they use these terms, they are just thinking relatively. When they say “overbought” they really just mean that the market is higher than before, and they think it won’t go any higher. “Oversold” would translate to mean it is lower than it was before. That is the reasoning why I find the need to insist that I and others why agree to start using a more appropriate termonology. It really actually makes me quite excited to talk about. New ideas have that exciting effect on me. From now on I will advocate the use of the words almost to the opposite of the current lexicon being “underbought” and “undersold”. They have actually already caught on in some places like eminiforecaster.

So what is this “Underbought”? All that this means is that the market has not gone up as much as it will in the future. Alternatively “undersold” means that the market has not gone down as much as it will in the future. It’s easy to see when you think about it how theses terms can replace and be a more appropriate alternative to “overbought” and “oversold”.

My goal is to move people away from looking back at the past to display where markets will go in the future. Let the past be in the past and let’s look at the future when considering things like this. In my experience the best traders are the ones that look at the value of a company now, and where it will be in the future as opposed to lamenting the past. They trade developing trends in the markets. They are anticipatory investors.

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