S&P 500   5,026.61
DOW   38,671.69
QQQ   437.05
Israel's finance minister blasts Moody's downgrade of the the country's credit rating
Investing Wizard Who Turned $37K Into $2.7M in Just 4 Years Makes His Next Big Move (Ad)
Mardi Gras beads are creating a plastic disaster in New Orleans. Are there green alternatives?
Super Bowl Live Updates | 49ers are Super Bowl favorites in 2025
Better Than Oil Stocks (Ad)
Venezuela defends military buildup, accusing neighboring Guyana of granting illegal oil contracts
Stock market today: World shares mostly higher after S&P 500 tops 5,000
Laser breakthrough could send stock soaring 2,467% (Ad)
Recession risks are fading, business economists say, but political tensions pose threat to economy
Biden's campaign joins TikTok, even as administration warns of national security concerns with app
S&P 500   5,026.61
DOW   38,671.69
QQQ   437.05
Israel's finance minister blasts Moody's downgrade of the the country's credit rating
Investing Wizard Who Turned $37K Into $2.7M in Just 4 Years Makes His Next Big Move (Ad)
Mardi Gras beads are creating a plastic disaster in New Orleans. Are there green alternatives?
Super Bowl Live Updates | 49ers are Super Bowl favorites in 2025
Better Than Oil Stocks (Ad)
Venezuela defends military buildup, accusing neighboring Guyana of granting illegal oil contracts
Stock market today: World shares mostly higher after S&P 500 tops 5,000
Laser breakthrough could send stock soaring 2,467% (Ad)
Recession risks are fading, business economists say, but political tensions pose threat to economy
Biden's campaign joins TikTok, even as administration warns of national security concerns with app
S&P 500   5,026.61
DOW   38,671.69
QQQ   437.05
Israel's finance minister blasts Moody's downgrade of the the country's credit rating
Investing Wizard Who Turned $37K Into $2.7M in Just 4 Years Makes His Next Big Move (Ad)
Mardi Gras beads are creating a plastic disaster in New Orleans. Are there green alternatives?
Super Bowl Live Updates | 49ers are Super Bowl favorites in 2025
Better Than Oil Stocks (Ad)
Venezuela defends military buildup, accusing neighboring Guyana of granting illegal oil contracts
Stock market today: World shares mostly higher after S&P 500 tops 5,000
Laser breakthrough could send stock soaring 2,467% (Ad)
Recession risks are fading, business economists say, but political tensions pose threat to economy
Biden's campaign joins TikTok, even as administration warns of national security concerns with app
S&P 500   5,026.61
DOW   38,671.69
QQQ   437.05
Israel's finance minister blasts Moody's downgrade of the the country's credit rating
Investing Wizard Who Turned $37K Into $2.7M in Just 4 Years Makes His Next Big Move (Ad)
Mardi Gras beads are creating a plastic disaster in New Orleans. Are there green alternatives?
Super Bowl Live Updates | 49ers are Super Bowl favorites in 2025
Better Than Oil Stocks (Ad)
Venezuela defends military buildup, accusing neighboring Guyana of granting illegal oil contracts
Stock market today: World shares mostly higher after S&P 500 tops 5,000
Laser breakthrough could send stock soaring 2,467% (Ad)
Recession risks are fading, business economists say, but political tensions pose threat to economy
Biden's campaign joins TikTok, even as administration warns of national security concerns with app

Oversold Stocks (RSI)

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.

Learn more about trading oversold stocks.


MarketRank™ evaluates a company based on dividend strength, earnings, valuation, analysts forecasts, and more.
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Analyst consensus is the average investment recommendation among Wall Street research analysts.
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Analyst ConsensusUpgrade to All Access to use the All Ratings Filter
CompanyCurrent PriceRSIPE RatioMarket CapVolumeAverage VolumeIndicator(s)
Air Products and Chemicals, Inc. stock logo
APD
Air Products and Chemicals
$219.84
0.0%
2.4220.98$48.87 billion2.38 million1.91 millionEarnings Report
Infosys Limited stock logo
INFY
Infosys
$20.10
-0.4%
3.5928.31$83.20 billion5.90 million8.86 million
Laboratory Co. of America Holdings stock logo
LH
Laboratory Co. of America
$222.59
-0.1%
5.0529.76$18.90 billion386,700653,604Upcoming Earnings
Analyst Report
Endeavour Silver Corp. stock logo
EXK
Endeavour Silver
$1.54
-1.3%
5.1530.81$350.97 million2.24 million3.34 millionPositive News
Watsco, Inc. stock logo
WSO
Watsco
$415.52
+1.5%
5.1727.43$16.37 billion471,000325,911Upcoming Earnings
Positive News
Medifast, Inc. stock logo
MED
Medifast
$53.53
-2.1%
5.894.88$583.08 million272,400289,218Positive News
Waters Co. stock logo
WAT
Waters
$322.82
-1.2%
6.3229.75$19.09 billion409,200412,874Earnings Report
Analyst Revision
Generac Holdings Inc. stock logo
GNRC
Generac
$126.91
-0.2%
7.8649.77$7.80 billion1.10 million786,086Upcoming Earnings
Stride, Inc. stock logo
LRN
Stride
$62.55
+4.0%
9.1115.80$2.71 billion774,000824,846
Freeport-McMoRan Inc. stock logo
FCX
Freeport-McMoRan
$37.36
-2.0%
10.4329.42$53.57 billion15.82 million12.82 millionAnalyst Revision
New Fortress Energy Inc. stock logo
NFE
New Fortress Energy
$31.87
-0.4%
10.5316.86$6.53 billion979,8001.07 millionAnalyst Revision
Interactive Brokers Group, Inc. stock logo
IBKR
Interactive Brokers Group
$98.06
+2.8%
11.0217.33$41.28 billion1.39 million1.53 million
Albertsons Companies, Inc. stock logo
ACI
Albertsons Companies
$21.20
-0.7%
11.589.06$12.21 billion2.24 million3.42 millionPositive News
Seneca Foods Co. stock logo
SENEA
Seneca Foods
$48.64
-5.8%
11.696.44$347.78 million83,50030,918Upcoming Earnings
High Trading Volume
TFI International Inc. stock logo
TFII
TFI International
$142.30
+0.6%
11.8224.49$12.02 billion810,100325,014Earnings Report
High Trading Volume
Quest Diagnostics Incorporated stock logo
DGX
Quest Diagnostics
$126.74
+0.2%
12.4316.92$14.25 billion621,2001.19 million
Tesla, Inc. stock logo
TSLA
Tesla
$193.57
+2.1%
12.5344.91$616.48 billion84.48 million110.10 millionAnalyst Revision
Becton, Dickinson and Company stock logo
BDX
Becton, Dickinson and Company
$243.75
+1.3%
12.5357.76$70.42 billion2.10 million1.59 million
eBay Inc. stock logo
EBAY
eBay
$42.43
+1.0%
12.838.39$22.02 billion5.10 million5.31 millionAnalyst Upgrade
OraSure Technologies, Inc. stock logo
OSUR
OraSure Technologies
$7.19
-0.4%
13.0010.89$528.32 million508,000742,296Upcoming Earnings
Positive News
Linde plc stock logo
LIN
Linde
$419.42
+1.3%
13.0633.29$203.37 billion1.35 million1.65 millionEarnings Report
Credit Suisse X-Links Gold Shares Covered Call ETN stock logo
GLDI
Credit Suisse X-Links Gold Shares Covered Call ETN
$143.24
-0.2%
13.89183.69$57.30 million1,5003,218Dividend Cut
First Trust Dow Jones International Internet ETF stock logo
FDNI
First Trust Dow Jones International Internet ETF
$22.39
+1.7%
14.2123.95$26.87 million1,9002,375Positive News
Church & Dwight Co., Inc. stock logo
CHD
Church & Dwight
$98.83
-1.1%
14.2932.51$24.35 billion1.38 million1.49 million
Open Lending Co. stock logo
LPRO
Open Lending
$7.50
+1.8%
14.4441.67$898.13 million359,000438,054Insider Selling
TechTarget, Inc. stock logo
TTGT
TechTarget
$35.03
+4.4%
14.52218.95$994.15 million125,500230,636Positive News
Abbott Laboratories stock logo
ABT
Abbott Laboratories
$111.81
-0.6%
14.7534.30$194.11 billion5.95 million5.47 million
First Trust NASDAQ Clean Edge Green Energy Index Fund stock logo
QCLN
First Trust NASDAQ Clean Edge Green Energy Index Fund
$36.68
+2.3%
14.7735.90$942.68 million129,900211,529Positive News
Medpace Holdings, Inc. stock logo
MEDP
Medpace
$326.39
+2.5%
15.0238.22$10.01 billion364,400169,800High Trading Volume
Nelnet, Inc. stock logo
NNI
Nelnet
$89.16
+1.0%
15.0225.47$3.33 billion78,00081,711Analyst Downgrade
News Coverage
CorVel Co. stock logo
CRVL
CorVel
$245.27
+2.1%
15.0556.78$4.19 billion41,10033,232Insider Selling
Check Point Software Technologies Ltd. stock logo
CHKP
Check Point Software Technologies
$164.31
+0.7%
15.0623.08$19.22 billion477,400775,079Earnings Report
Analyst Revision
Pinnacle West Capital Co. stock logo
PNW
Pinnacle West Capital
$67.00
+0.9%
15.4015.95$7.60 billion1.06 million1.24 millionPositive News
Air Transport Services Group, Inc. stock logo
ATSG
Air Transport Services Group
$14.87
+2.7%
15.5110.05$970.61 million995,800591,275Positive News
NextEra Energy Partners, LP stock logo
NEP
NextEra Energy Partners
$28.09
+0.0%
16.2113.19$2.62 billion1.28 million1.57 millionPositive News
Xylem Inc. stock logo
XYL
Xylem
$124.30
+1.6%
16.2645.70$29.97 billion1.59 million1.37 millionEarnings Report
Dividend Increase
Educational Development Co. stock logo
EDUC
Educational Development
$1.73
-2.8%
16.4686.54$14.83 million8,10034,818Analyst Report
Gap Down
Graco Inc. stock logo
GGG
Graco
$88.16
+0.4%
16.6329.99$14.88 billion528,000669,104Insider Selling
Cirrus Logic, Inc. stock logo
CRUS
Cirrus Logic
$93.06
-0.2%
16.9929.54$5.02 billion725,500480,364Analyst Upgrade
Insider Selling
Danaher Co. stock logo
DHR
Danaher
$242.95
-1.2%
17.1738.02$179.52 billion2.54 million3.09 million
Key Tronic Co. stock logo
KTCC
Key Tronic
$4.70
+0.6%
17.3211.46$50.58 million11,80016,632Analyst Report
News Coverage
FTAI Aviation Ltd. stock logo
FTAI
FTAI Aviation
$53.89
+1.9%
17.7744.54$5.40 billion841,500754,639
Canadian Solar Inc. stock logo
CSIQ
Canadian Solar
$22.91
+3.8%
17.924.57$1.48 billion1.14 million1.31 millionPositive News
Expeditors International of Washington, Inc. stock logo
EXPD
Expeditors International of Washington
$127.36
+0.1%
18.0924.08$18.52 billion887,6001.10 millionPositive News
Genie Energy Ltd. stock logo
GNE
Genie Energy
$18.49
-2.1%
18.318.22$507.00 million123,600194,332Dividend Announcement
IDEX Co. stock logo
IEX
IDEX
$228.20
+1.0%
18.4529.11$17.26 billion460,000433,046Earnings Report
Analyst Revision
LivaNova PLC stock logo
LIVN
LivaNova
$50.52
-0.4%
18.491,010.60$2.72 billion344,600395,768
Align Technology, Inc. stock logo
ALGN
Align Technology
$296.37
+0.5%
18.5550.92$22.70 billion855,6001.02 millionInsider Selling
Costco Wholesale Co. stock logo
COST
Costco Wholesale
$723.40
-0.1%
18.7249.31$320.99 billion1.43 million2.08 millionAnalyst Revision
Saia, Inc. stock logo
SAIA
Saia
$565.27
+2.2%
18.7342.60$15.01 billion379,400297,564
Cameco Co. stock logo
CCJ
Cameco
$44.06
-1.5%
19.0873.43$19.13 billion6.86 million6.00 millionAnalyst Revision
Wipro Limited stock logo
WIT
Wipro
$5.86
+0.2%
19.1923.44$30.58 billion691,3003.04 million
DVOL
First Trust Dorsey Wright Momentum & Low Volatility ETF
$28.41
+0.3%
19.2220.31$48.30 million3,70011,364Positive News
Trane Technologies plc stock logo
TT
Trane Technologies
$275.44
+2.0%
19.3531.34$62.68 billion959,4001.17 millionDividend Increase
Insider Selling
McCormick & Company, Incorporated stock logo
MKC
McCormick & Company, Incorporated
$64.65
-1.8%
19.3825.65$17.34 billion2.11 million2.16 millionPositive News
Patterson Companies, Inc. stock logo
PDCO
Patterson Companies
$28.68
-0.7%
19.3813.92$2.66 billion785,9001.47 million
Autohome Inc. stock logo
ATHM
Autohome
$25.63
+1.0%
19.3911.98$3.22 billion235,000476,461Positive News
AutoNation, Inc. stock logo
AN
AutoNation
$152.17
+3.5%
19.486.52$6.47 billion449,600362,850Upcoming Earnings
Analyst Revision
Thermo Fisher Scientific Inc. stock logo
TMO
Thermo Fisher Scientific
$550.75
0.0%
19.4935.65$212.79 billion1.28 million1.98 million
C.H. Robinson Worldwide, Inc. stock logo
CHRW
C.H. Robinson Worldwide
$74.67
+0.0%
19.5227.55$8.71 billion941,6001.59 millionDividend Announcement
Celsius Holdings, Inc. stock logo
CELH
Celsius
$58.39
-0.5%
19.71121.65$13.53 billion2.52 million4.51 million
First Trust International IPO ETF stock logo
FPXI
First Trust International IPO ETF
$43.71
+0.9%
19.8724.60$170.47 million13,20019,914Positive News
Canadian National Railway stock logo
CNI
Canadian National Railway
$128.57
+0.3%
19.9120.28$82.54 billion768,7001.07 millionAnalyst Revision
Positive News
SuRo Capital Corp. stock logo
SSSS
SuRo Capital
$3.39
-5.3%
19.9748.44$85.46 million429,10087,943Positive News
High Trading Volume
Central Garden & Pet stock logo
CENT
Central Garden & Pet
$41.43
+3.9%
20.0020.55$2.79 billion403,100106,825Analyst Report
Stock Split
Gap Up
High Trading Volume
Hannon Armstrong Sustainable Infrastructure Capital, Inc. stock logo
HASI
Hannon Armstrong Sustainable Infrastructure Capital
$23.86
+1.4%
20.0162.79$2.66 billion1.31 million1.15 millionUpcoming Earnings
Positive News
Herbalife Ltd. stock logo
HLF
Herbalife
$12.07
-2.3%
20.026.45$1.20 billion1.36 million1.23 millionUpcoming Earnings
Iron Mountain Incorporated stock logo
IRM
Iron Mountain
$68.63
+0.1%
20.0572.24$20.04 billion741,6001.35 million
AptarGroup, Inc. stock logo
ATR
AptarGroup
$138.96
+5.2%
20.0932.70$9.14 billion650,900349,825Earnings Report
Analyst Revision
Cincinnati Financial Co. stock logo
CINF
Cincinnati Financial
$108.89
+1.2%
20.239.33$17.09 billion647,200731,536Earnings Report
Rush Enterprises, Inc. stock logo
RUSHA
Rush Enterprises
$47.44
+1.9%
20.3610.90$3.77 billion301,900446,171Upcoming Earnings
News Coverage
Positive News
Whirlpool Co. stock logo
WHR
Whirlpool
$109.06
-1.0%
20.4912.52$5.98 billion687,7001.22 million
Asbury Automotive Group, Inc. stock logo
ABG
Asbury Automotive Group
$215.92
+4.4%
20.547.55$4.44 billion290,800154,750Earnings Report
PLDT Inc. stock logo
PHI
PLDT
$23.38
+1.0%
20.6326.57$5.05 billion25,40027,850
Alamos Gold Inc. stock logo
AGI
Alamos Gold
$11.95
-1.2%
20.6923.43$4.74 billion1.64 million2.24 million
A. O. Smith Co. stock logo
AOS
A. O. Smith
$80.54
+0.4%
20.7021.77$11.98 billion707,600968,889
Eldorado Gold Co. stock logo
EGO
Eldorado Gold
$11.89
-2.2%
20.7538.35$2.42 billion1.29 million1.30 million
Carrier Global Co. stock logo
CARR
Carrier Global
$56.01
+1.7%
20.8135.45$50.32 billion5.58 million4.09 millionEarnings Report
Insider Selling
Arcos Dorados Holdings Inc. stock logo
ARCO
Arcos Dorados
$12.03
+1.3%
20.8514.15$2.53 billion1.04 million823,875Positive News
Ameren Co. stock logo
AEE
Ameren
$68.70
+1.1%
20.8515.61$18.06 billion1.89 million1.91 millionDividend Increase
Positive News
Rush Enterprises, Inc. stock logo
RUSHB
Rush Enterprises
$49.94
+1.1%
20.8511.47$3.97 billion60,60015,696Upcoming Earnings
Positive News
High Trading Volume
Cognizant Technology Solutions Co. stock logo
CTSH
Cognizant Technology Solutions
$77.10
-1.5%
20.8518.36$38.66 billion5.33 million3.87 millionEarnings Report
Dividend Increase
Analyst Revision
Mettler-Toledo International Inc. stock logo
MTD
Mettler-Toledo International
$1,174.51
-4.1%
20.8632.73$25.46 billion291,000167,682Earnings Report
Analyst Upgrade
Monro, Inc. stock logo
MNRO
Monro
$32.81
+0.7%
20.9130.66$981.02 million419,900418,511Dividend Announcement
Positive News
Weyerhaeuser stock logo
WY
Weyerhaeuser
$33.28
+0.8%
20.9128.94$24.29 billion3.19 million3.62 millionDividend Increase
Analyst Revision
Positive News
Medtronic plc stock logo
MDT
Medtronic
$84.99
-1.4%
20.9327.68$113.01 billion8.84 million6.01 million
Group 1 Automotive, Inc. stock logo
GPI
Group 1 Automotive
$275.92
+2.5%
20.976.47$3.81 billion141,200137,071
Deere & Company stock logo
DE
Deere & Company
$381.29
-1.2%
21.0811.00$106.86 billion1.43 million1.29 millionUpcoming Earnings
Invesco Water Resources ETF stock logo
PHO
Invesco Water Resources ETF
$62.20
+0.5%
21.0922.98$1.99 billion61,80085,961Positive News
Agilent Technologies, Inc. stock logo
A
Agilent Technologies
$133.34
-0.5%
21.1331.67$39.07 billion909,7001.44 millionPositive News
Charter Communications, Inc. stock logo
CHTR
Charter Communications
$291.15
+3.0%
21.139.70$43.07 billion2.08 million1.70 million
Pacira BioSciences, Inc. stock logo
PCRX
Pacira BioSciences
$28.78
+3.9%
21.25319.78$1.34 billion604,000552,132Positive News
Lincoln Educational Services Co. stock logo
LINC
Lincoln Educational Services
$10.14
+0.3%
21.3111.14$317.99 million52,70079,554
Qiagen stock logo
QGEN
Qiagen
$44.49
+0.8%
21.4829.41$9.84 billion1.17 million1.68 millionEarnings Report
Analyst Revision
iShares ESG MSCI EM Leaders ETF stock logo
LDEM
iShares ESG MSCI EM Leaders ETF
$42.83
+0.8%
21.5511.23$32.12 million2,2003,468Positive News
Sabine Royalty Trust stock logo
SBR
Sabine Royalty Trust
$62.43
+0.5%
21.5610.10$910.17 million54,50050,443Dividend Cut
Columbus McKinnon Co. stock logo
CMCO
Columbus McKinnon
$42.06
+1.2%
21.6624.89$1.21 billion117,100157,500Positive News
Eaton Co. plc stock logo
ETN
Eaton
$277.96
+1.7%
21.7734.66$110.99 billion1.56 million1.66 millionInsider Selling
UFP Technologies, Inc. stock logo
UFPT
UFP Technologies
$174.72
+1.1%
21.8032.12$1.33 billion25,90050,931Analyst Downgrade
ALLETE, Inc. stock logo
ALE
ALLETE
$58.29
+0.9%
21.8313.52$3.35 billion236,300291,321
How Technical Indicators Can Help You Find Oversold Stocks 

An oversold stock is one that trades at a price that is lower than its perceived intrinsic value. By definition, an oversold stock is one that analysts believe has the potential to rise in price.  

Just because a stock meets the criteria for being oversold does not necessarily mean it’s ready to over-perform. 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).

In this article, we go deeper into the reasons a stock becomes oversold and the technical indicators that investors look at to identify oversold stocks. It also touches on the importance of conducting fundamental analysis that may confirm the technical trend for a stock.  

The most basic definition of intrinsic value is as an estimation of what a business is worth if the entire business and its assets were sold off. Intrinsic value is a measurement of a company’s financial performance based on its cash flow.  

Intrinsic value is different from the current stock price. Analysts use objective calculations or proprietary financial models. A common model used to calculate intrinsic value is the discounted cash flow formula.  

To use the discounted cash flow formula, investors must know three data points: 

  • The company’s estimated future cash flows
  • The discount rate (this is used to determine the present value of estimated future cash flows)
  • A terminal value (a method for valuing the company at the end of the cash flow estimate)

This can look intimidating for many investors who don’t have a finance background. However, many stock analysts will provide intrinsic values for a company.  

The primary limitation to calculating intrinsic value is that not every asset has an intrinsic value. For example commodities, such as gold and silver, don’t generate income so by cash flow models, they have no intrinsic value. The same is true of cryptocurrencies.  

Another limitation to intrinsic value occurs with companies that have limited revenue or profits. These companies have an intrinsic value, but there is a lack of confidence in estimates of future revenue and profits. That same lack of confidence will be a concern when calculating intrinsic value.  

Investors will look at both fundamental and technical indicators to identify an oversold stock. Fundamental analysts will look at metrics such as a company’s price-to-earnings (P/E) ratio in comparison to other companies within that sector or industry. They will also look at earnings reports that help describe the inner workings of a company including a review of their balance sheet for capital flows and debt levels.  

Negative News Events – This can include items such as a product recall or a lawsuit. For a biotech company, it can mean failing in a clinical trial.  

Negative Economic Reports – Every month, investors get a series of economic reports that provide directional clues to the health of the overall economy. These include retail sales data, information on housing starts, the consumer price index (CPI) and the producer price index (PCI) which provide data on inflation, and the monthly jobs report.  

Geopolitical Events - Wars, trade disputes, and issues such as financial sanctions or embargos can have an effect on individual stocks and/or entire sectors.  

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.  

Change in Management – This can be bullish if a leader who is perceived to be ineffective is being replace. But if an effective leader is being replaced, it can cause investors to sell in expectation that the new leader will not be as effective in managing the company.  

A company’s price-to-earnings (P/E) ratio is a measure of how much it costs an investor to buy one dollar of a company’s profits. So a P/E of 25 means it will cost an investor $25 to buy one dollar of a company’s profits.  

In general, a lower P/E number means a stock could be oversold. However, investors should be less concerned about a company’s individual number and more concerned about how its number compares to other companies in its sector. They may also look at it compared to a benchmark index or with companies that have a similar market capitalization (market cap). A stock that is trading significantly lower than others in its sector may indicate that the stock is oversold.  

However, fundamental indicators, only get investors so far. Technical analysts will look at technical indicators that will help them confirm an oversold condition. One of the most common of these is the Relative Strength Indicator (RSI).

The RSI is a technical indicator that measures volatility. RSI is expressed as a ratio of the average upward movement to the average downward movement of a stock over a specific period of time, typically 14 days. The RSI attempts to reveal how committed buyers and sellers are to their positions.  

Like any index, the Relative Strength Index is only as good as its benchmarks. In this case, investors typically pay attention to the numbers 30 and 70. An RSI below 30 is seen as an oversold indicator. When a stock is in a downtrend, sellers will outnumber buyers meaning the index will show more lows than highs. 

Traders use charting software to overlay the RSI, along with other technical indicators, on a daily chart. Here are some additional technical indicators that traders use with the RSI to identify oversold stocks: 

Candlestick Patterns – Displaying a daily chart using a candlestick pattern tells traders a story of price movement by both the shape and shading of the candle. Because they are useful in identifying potential changes in market direction, accurate interpretation of a candlestick pattern can provide confirmation for an RSI level. 

Bollinger Bands – these are bands that are plotted one standard deviation above and one standard deviation below a security’s exponential moving average. A security that is selling near the low end of the lower Bollinger band and has a low RSI is usually considered oversold.  

Fibonacci Retracement Levels – A Fibonacci retracement level is identified by taking an extreme high and low on a stock chart and dividing the distance between the two (visually this will be the vertical distance) by the key Fibonacci ratios (23.6%, 38.2%, 50%, 61.8%, and 100%). These levels will then be defined on a chart by horizontal lines that indicate potential areas of support and resistance. It is unclear why the Fibonacci ratios are such a consistent predictor of stock price movement only that they are.  

Moving Average Convergence/Divergence Oscillator (MACD) – The moving average convergence/ divergence oscillator shows the relationship between two exponential moving averages (EMAs). 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. By subtracting the longer average from the shorter average, the MACD displays both the trend of the price action for the underlying security as well as the momentum of buying and selling activity. 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). 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). 

What Are the Limitations to Using Technical Indicators to Find Oversold Stocks? 

  • A turnaround may not be immediate – Stocks don’t move in the same direction all the time, but when a stock becomes oversold, it can stay that way for a long time. That may not be an obstacle for a long-term investor, but traders will want to use other indicators to confirm a reversal is imminent.
  • Investor sentiment is an imperfect metric – To put it simply, investors aren’t always rational. That means that a fundamentally sound company may see its stock continue to fall in price due to the “madness of crowds” effect.
  • The definition of an oversold stock is subjective – Technical indicators offer one data point, but analysts may disagree on what it’s actually saying about the fortunes of a stock.
  • Sometimes a stock is oversold for a reason – Technical indicators can show you the what, but not the why. It’s important for investors to perform their own due diligence to ensure they are not trying to catch a falling knife.

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.

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. This may be sufficient for long-term investors.

On the other hand, traders, particularly day traders, will look at technical indicators to help them define their trading strategies. 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.

However, just because the RSI shows an oversold condition does not mean the stock is certain to rise in price. Stocks can rise and/or fall for reasons that defy market expectations.


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