Oversold Stocks scans for the most oversold stocks today based on RSI momentum technical indicator. Oversold stocks are worth watching for traders because many stocks ended up bouncing back from a down trend.
Most Oversold Stocks Today
When the RSI technical indicator is below 30, a stock is considered oversold. When the RSI indicator pointing up from 30, it generates a bullish signal.
The most oversold stocks today is useful for swing traders who are looking for stocks that have been beaten down recently, and has potential to bounce back.
The oversold stocks today list is updated daily after market close.
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What does Oversold Stock Mean
First, let's define what does oversold stock mean. Oversold stocks have different meaning depends on who you asked.
For a long term investor, a stock is considered oversold when it is trading under the true value based on fundamental data such as P/E ratio. If a stock's P/E ratio is at a historical low, it will be considered as cheap to long term value investors.
For technical traders, the perspective of oversold stocks are totally different than the measurements of P/E ratios of a company. As a short term trader, we determine whether a stock is oversold based on the RSI indicator or the stochastic oscillator.
When the RSI indicator drops below 30, the stock is considered oversold or when the stochastic oscillator drops below 20, it is also considered oversold. Often, these two technical indicators generate conflicting signals.
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How to Find Oversold Stocks
There are different ways to find oversold stocks depending on whether you are a technical short term trader or a long term investor.
Since we are at a technical stock trading site, we will only be discussing on how to find oversold stocks based on the technical indicators.
This page lists all the stocks that are oversold based on the RSI indicator (below 30) with volume over 200,000. If you prefer to use the stochastic indicator, simply follow the below steps.
- Go to our main page https://stock-screener.org
- Scroll down to find the stochastic indicator under the Technical Stock Screener
- Select the stochastic crossover from 0 & 30.
- Hit the submit button, and you will get a list of stocks that are oversold based on the stochastic indicator.
Oversold Trading Strategy
As a technical trader, we should never rely on a single indicator.
We should use multiple technical indicators and chart patterns to generate a buy and sell signal.
It is recommended that a trader combines the RSI or the stochastic with other indicators for best results.
Let's take a look at a chart example.
The oversold stock signal based on the RSI indicator works out well for the stock COUP. During mid March, the stock form three bullish signals.
- RSI drops below 30 and bounces back above the RSI oversold few days later
- MACD made a crossover which is another bullish sign
- On top of that, the stock is trading at an usually high volume on the day that it bounced back from the bottom.
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I wish to tell you that every trade works out as well as this one, but that's not the case. Often times, a stock fails to go up and you need to get out at a loss or break even. You need to have a plan before you enter a trade and have an exit strategy to get out when things are not working out.
Please understand that just because a stock is oversold based on the technical indicator doesn't mean it has reach the bottom.
There are many factors that may cause the down trend, such as the general market is in a negative territory, or the economy is in trouble, or the industry is not doing good, or the stock itself may be in trouble.
During a downtrend, a stock can be in the oversold territory for a very long time. A trader has to be careful not to jump in on a trade too early otherwise he will end up losing money.
Buying a stock during downtrend is like catching a falling knife, the odds are against you. Conservative traders should wait for signs of recovery and set tight stop loss to buy oversold stocks.
To learn more, read the following related articles
How to trade oversold stocks
When to sell a stock
How to read stock charts
Oversold Penny Stocks
This list does not include penny stocks. For those who are interested in oversold penny stocks, use the penny stocks scanner.