The market is considered to be overbought and subject to a negative correction when more than
A) 60% of the stocks are selling above their 90 day average.
B) 70% of the stocks are selling above their 100 day average.
C) 80% of the stocks are selling above their 200 day average.
D) 700% of the stocks are selling above their 150 day average.
E) 90% of the stocks are selling above their 150 day average.

Question

Quizplus · Accepted Answer

Generally, an overbought market is one where a large majority of stocks are trading above their long-term moving averages. Therefore, the option with the highest percentage of stocks above a long-term moving average (option C with 80% above their 200 day average) is the best choice for indicating an overbought market.

The Market Is Considered to Be Overbought and Subject to a Negative