Doug: You provide a deep understanging of "Oversold". A simple version of Oversold is also offered by William O'Nell of CANSLIM. On page 66 of his book "How to make money in stocks", he said that "The short-term oversold indicator is a 10-day moving average of declines in the market." However, to most investors, the oversold means bottom out which is a buying opportunity. On this board, you can find several persons getting in RLLY on Friday because it is OVERSOLD. I think that it is a unwise move due to the small trading volume (I did not blame them because they play the game using their own money). I believe that one should wait to a significant volume increase for a downtrend stock because one who are willing to sell the stock has sold out. Then the stock will bounce back immediately (I can offer as many examples as I am asked). I am glad you have noticed this feature, and predict RLLY may take 2 days to stabalize then it begins moving up. If what you indicated is true, why can't we wait two more days and take risks to get in on Friday?
Back to RLLY, it does not show any sign of this feature (volume increase). I predict RLLY will keep falling to next resistance at $3.00. If it breaks $3.00, the next one is $2.00 (it is most unlikely IMO). Of cause the real movement of RLLY depends on not only technical analysis, but also the entire market reaction. Currently, Hong Kong HangSen and Japan Nikkei increase 4.63% and 6.26%, respectively, at 10:00PM estern time. Tomorrow is a big day for U.S. market. Perhaps, RLLY will rally tomorrow. However, the pure technical analysis does not show this feature. This uncertaincy is a true beauty of the stock investiment. |
