Overbought is good or bad?

The term "overbought" is neutral and does not inherently imply whether it is good or bad. It simply means that a security or market is trading at a level above its intrinsic or fair value, as perceived by traders. The implications of being overbought depend on the context and the underlying reasons for the condition:

1. **Technical Analysis Perspective**: From a technical analysis perspective, overbought conditions can indicate a potential for a price correction or reversal as excessive buying pressure may not be sustainable. This is because overbought states often precede a pullback or a period of short-term volatility.
2. **Fundamental Analysis Perspective**: Fundamentally, overbought can suggest that a stock's price has risen beyond what its underlying fundamentals can justify, which may present a valuation concern for long-term investors. However, it's important to note that technical analysis and fundamental analysis often have different time horizons and can lead to different conclusions.
3. **Market Sentiment**: Overbought conditions can also reflect overly optimistic market sentiment, which may lead to a bubble or a period of market exuberance. This can be followed by a correction or a shift in investor sentiment.
4. **Investment Strategy**: For traders and investors with different strategies, overbought conditions can be an opportunity or a risk. Technical traders might view overbought states as potential entry points for short-term trades, while fundamental investors might see it as a warning sign to reassess the valuation and possibly sell.

In conclusion, whether overbought is seen as good or bad depends on the investor's perspective, time horizon, and investment goals. It is a valuable concept in technical analysis, but it should be used in conjunction with other indicators and market analysis to make informed decisions.