Oversold (redirected from oversell)

Oversold

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

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oversold

Of, relating to, or being a stock market that has declined rapidly and steeply in the recent past and is likely to exhibit short-term price increases in the near future. Determining whether a market is oversold is difficult and is subject to individual interpretation.

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Oversold

In technical analysis, describing a security with too low a price. This means that the technical indicators on the security do not justify its current price. Technical analysts may recommend buying oversold securities, as they are due for a price correction. See also: Overbought.

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Oversold. A stock, a market sector, or an entire market may be described as oversold if it suddenly drops sharply in price, despite the fact that the country's economic outlook remains positive.

For technical analysts, an oversold market is poised for a price rise, since there would be few sellers left to push the price down further.

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Oversold

What Does Oversold Mean?

(1) A condition in which the price of an underlying asset has fallen sharply to a level below its fundamental value. This condition is usually a result of market overreaction or panic selling. (2) A situation in technical analysis in which the price of an asset has fallen to such a degree—usually on high volume—that an oscillator has reached a lower bound. This generally is interpreted as a sign that the price of the asset is becoming undervalued and may represent a buying opportunity for investors.

Investopedia explains Oversold

(1) Assets that have experienced sharp declines over a brief period often are deemed to be oversold. Determining the degree to which an asset is oversold is very subjective and can differ between investors.

(2) Identifying areas where the price of an underlying asset has been pushed unjustifiably to extremely low levels is the main goal of technical indicators such as the relative strength index, the stochastic oscillator, the moving average convergence divergence, and the money flow index. Oversold is the opposite of overbought.

Related Terms:
• Moving Average
• Moving Average Convergence Divergence—MACD
• Overbought
• Relative Strength Index—RSI
• Stochastic Oscillator