For example commodities, such as gold and silver, don’t generate income so by cash flow models, they have no intrinsic value.
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This screen highlights stocks with an Overbought Stochastic Oscillator reading, typically when the Stochastic %K and %D lines are above 80. This suggests that the stock may be trading near the upper end of its recent price range and could be due for a pause, pullback, or reversal. Technical analysts will look at technical indicators that will help them confirm an oversold condition. Stocks with poor technical strength that rally into overbought territory often lack sustained buying support.
To determine an oversold condition, investors will use both fundamental and technical analysis. Some fundamental metrics that will be used include the price-to-earnings (P/E) ratio, earnings reports and a company’s balance sheet. When a stock is oversold, analysts mean that its price has gone too far in a negative direction. They base this on both fundamental and technical indicators that suggest that the stock is now trading at a discount to its intrinsic value. When confirmed with other trading signals, an oversold stock can be a buying signal. Moving Average Convergence/Divergence Oscillator (MACD) – The moving average convergence/ divergence oscillator shows the relationship between two exponential moving averages (EMAs).
RSI – Oversold Stocks
An RSI of under 30 on a daily chart is generally used to determine that an asset is oversold and indicates that the stock may soon bounce back from the oversold conditions. This screen highlights technically weak stocks (as determined by SwingTradeBot’s proprietary letter grade rankings) that are currently overbought and displaying bearish reversal signals. These setups may signal the end of a short-term bounce and a potential continuation of the broader downtrend. This screen highlights stocks with weak technical ratings (based on SwingTradeBot’s proprietary letter grade system) that are currently exhibiting an overbought Stochastic condition. These stocks may be experiencing short-term rallies within larger downtrends, and could be setting up for potential reversals or pullbacks.
- This page lists oversold stocks according to their Relative Strength Index (RSI), which is a momentum indicator used in technical analysis.
- This crossover suggests that bullish momentum is returning after a period of weakness.
- Negative Economic Reports – Every month, investors get a series of economic reports that provide directional clues to the health of the overall economy.
- Geopolitical Events – Wars, trade disputes, and issues such as financial sanctions or embargos can have an effect on individual stocks and/or entire sectors.
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- To determine an oversold condition, investors will use both fundamental and technical analysis.
- Overbought readings signal that momentum has been strong — but also that the price may be extended.
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The Stochastic Oscillator is a widely used momentum indicator that measures a stock’s closing price relative to its recent trading range. A bullish crossover from oversold conditions often signals a potential trend reversal or bounce, making it valuable for swing traders and technical analysts. Investors will look at both fundamental and technical indicators to identify an oversold stock.
Oversold Stochastic – Spot Potential Reversal and Bounce Opportunities
A security that is selling near the low end of the lower Bollinger band and has a low RSI is usually considered oversold. Earnings Reports – While these can technically be considered news events, earnings reports are generally seen as an event unto themselves. Companies go to great lengths to prepare analysts and investors for bad news, but are not always successful. While an oversold Stochastic doesn’t guarantee a rally, it can be a useful tool for traders seeking low-risk entry points during pullbacks or after sharp declines. Like any index, the Relative Strength Index is only as good as its benchmarks.
An oversold reading reflects weakened downside momentum, which can precede a recovery, especially when supported by price action or volume confirmation. A list of stocks that are “overbought” according to the Relative Strength Index (RSI), which is an indicator often used in technical analysis. An RSI of over 70 on a daily chart is generally used to determine that an asset is overbought and indicates that the stock may soon reverse to the downside. Stocks that are fundamentally or technically strong but temporarily oversold can offer excellent mean-reversion or trend continuation opportunities. The added presence of bullish reversal signals—such as hammer candlesticks, bullish engulfing patterns, or MACD crossovers—helps validate the timing of potential entries.
Should Investors Use the Price-to-Earnings (P/E) Ratio in Determining an Oversold Stock?
Traders will look for signal line crossovers, center line crossovers, and divergences between the MACD line as triggers for buying (bullish divergence) and selling (bearish divergence). SwingTradeBot’s letter grades reflect overall technical strength, so stocks with lower ratings tend to underperform the market or exhibit weak price action. When these weak stocks become overbought, they may be ripe for mean-reversion trades or short opportunities. These setups often present compelling entry points for traders looking to catch a bounce or ride a new upswing. The Stochastic Oscillator is a momentum-based indicator used to detect extremes in buying or selling pressure.
This screen identifies stocks with strong overall technical ratings (based on SwingTradeBot’s proprietary letter grade system) that are currently showing an oversold Stochastic reading. These setups often highlight high-quality stocks experiencing short-term pullbacks, potentially offering attractive entry points for swing traders. This momentum-based indicator compares overbought and oversold stocks screener a stock’s closing price to its recent trading range and is often used to identify potential short-term turning points.
One of the most common indicators is the Relative Strength Index (RSI) which helps to show the momentum and volatility surrounding price movement. When the RSI is used with other technical indicators it can provide further confirmation of oversold conditions. The SwingTradeBot letter grades reflect a stock’s relative technical strength across multiple indicators and timeframes. By filtering for highly ranked stocks that are temporarily oversold, this scan helps traders uncover mean-reversion or bounce candidates within an otherwise strong trend.
An overbought reading doesn’t necessarily mean a stock will reverse immediately, but it does suggest that buying momentum may be extended. Traders can use this signal as a warning to tighten stops, consider profit-taking, or look for confirmation of a potential reversal. These levels will then be defined on a chart by horizontal lines that indicate potential areas of support and resistance.
Rather it is a way for analysts to define the current state of supply and demand. Analysts seek to find the sweet spot between price (which is the dollar amount investors pay for a security) and value (what that security is actually worth). Enter your email address to see which stocks MarketBeat analysts think might become the next trillion dollar tech company. However, just because the RSI shows an oversold condition does not mean the stock is certain to rise in price.
The Stochastic Reached Oversold scan identifies stocks where the Stochastic Oscillator (14, 3, 3) has dropped below the 20 threshold, indicating the stock may be in oversold territory. This widely-used momentum indicator helps traders spot conditions where a stock has experienced significant short-term selling pressure. This page lists oversold stocks according to their Relative Strength Index (RSI), which is a momentum indicator used in technical analysis. RSI measures the magnitude and speed of a public company’s recent price changes to evaluate overvalued or undervalued conditions in the price of that company. A list of stocks that are “oversold” according to the Relative Strength Index (RSI), which is an indicator often used in technical analysis.
The most common moving averages used are the 26-day moving average as the longer average and the 12-day moving average as the shorter average. The companion to the MACD line is a signal line which is the 9-day EMA for the asset being used. The MACD is a momentum oscillator that moves above or below a center line (also called a zero line).