Thursday, July 18, 2013

Meaning of Overbought and Oversold


Meaning of Overbought:
A stock or commodity market condition where there has been significant trading bidding up prices to higher levels, levels which seem overextended by common man's arms reach.

Overbought is a term used to describe a market or a stock that has appreciated so rapidly and has generated such excessively bullish sentiment that a near-term decline is highly likely

In technical analysis, it is a market in which the volume of buying that has occurred is greater than the fundamentals justify.

Is a technical opinion that the market price has risen too steeply and too fast in relation to underlying fundamental factors. It is important to keep in mind that overbought is not necessarily the same as being bearish. It merely infers that the stock has risen too far too fast and might be due for a pullback.

A physical asset or futures contract whose prices have been pushed up to a level that some believe is unrealistically high and cannot be sustained ie. when the speculative long interest has rapidly increased and the speculative short interest is sharply reduced.

Meaning of Oversold:
Oversold is a term used to describe a technical opinion of a market has declined too steeply and too fast in relation to underlying fundamental factors

An analytical term for a stock that is underpriced a condition of the marked after an abrupt recession. In this situation a correction rise is possible

A technical condition that occurs when prices are considered too low and ripe for a rally. It is important to keep in mind that oversold is not necessarily the same as being bullish. It merely infers that the security has fallen too far too fast and may be due for a reaction rally.

Its the reverse of overbought. A single security or a market which, it is believed, has declined to an unreasonable level. A market which has fallen too far and too fast under excessive selling pressure and is expected to move back to a higher, more neutral level.

Used in the context of general equities. Technically too low in price, and hence a technical correction is expected. Antithesis of overbought

A physical asset or futures contract whose prices have been pushed down to a level that some believe is unrealistically low and cannot be sustained ie. when the speculative long interest has been drastically diminished and the speculative short interest increases.

Post a Comment

Popular Posts for last 7 days

All Time Popular Posts

Eq mkt Holidays for the 2017 year

Sr. No.

DateDayDescription
126-Jan-2017ThursdayRepublic Day
224-Feb-2017FridayMahashivratri
313-Mar-2017MondayHoli
404-Apr-2017TuesdayRam Navami
514-Apr-2017FridayDr.Baba Saheb Ambedkar Jayanti/ Good Friday
601-May-2017MondayMaharashtra Day
726-Jun-2017MondayId-Ul-Fitr (Ramzan ID)
815-Aug-2017TuesdayIndependence Day
925-Aug-2017FridayGanesh Chaturthi
1002-Oct-2017MondayMahatama Gandhi Jayanti
1119-Oct-2017ThursdayDiwali-Laxmi Pujan*
1220-Oct-2017FridayDiwali-Balipratipada
1325-Dec-2017MondayChristmas

*Muhurat Trading will be conducted. Timings of Muhurat Trading shall be notified subsequently.

The holidays falling on Saturday / Sunday are as follows:

Sr. No.DateDayDescription
109-Apr-2017SundayMahavir Jayanti
202-Sep-2017SaturdayBakri ID
330-Sep-2017SaturdayDasera
401-Oct-2017SundayMoharram
504-Nov-2017SaturdayGurunanak Jayanti