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Oversold Under the oversold market, index or stock we understand the condition when following a phase where the market has seen prices decline which coincides with a big Bearish Volume surge or big Bearish Volume Accumulation we start to see decrease in the volume accumulation.
In general big Bearish Volume indicates that a large number of low-priced shares are being transferred (i.e., distributed) from one group of market participants to another. Following the surge, which uses up a lot of selling power, the number of those sellers that are still willing to "keep giving away" shares at low ("bargain") prices becomes exhausted and market, index or stock becomes "oversold". Sellers are no longer willing to dump their shares at the bid - the market has reached a critical point where it is vulnerable to a trend reversal up. (plus here buyers move in who are bottom fishing and shorts start to cover). |