Market Extension Logic
Climax Risk:
Used for late-stage, parabolic blowouts (like what you've seen with MU). It requires massive distance from the 50 EMA (>25%), >4x ATR extension, price pegged near the top of its historical range (≥95th percentile), and high positive acceleration.
Overextended:
Vulnerable to sharp mean reversions. Usually characterized by moving very fast away from the 20 and 50 EMAs, but maybe hasn't hit full parabolic metrics yet.
Extended:
Hot but structurally sound. It's trending above its short-term moving averages with decent ATR expansion.
Discounted:
Captures downside extension/capitulation. Identifies when the price has fallen heavily below its moving averages and trades near the absolute bottom of its historical range.
Fair:
The default state for a symbol tracking relatively closely to its historical mean and moving averages without excess stretching.