Stocks being oversold in one day?

HI

I am only new at this and just been reading around different posts and have read allot about company's that have oversold in a day, can someone explain to me how do you know when company's stocks have been oversold? or what are in the indicators that they have?
Is this something that is just personal opinion or is it an actual statistic?
Thanks in advance

Take a look at the RSI indicator

http://www.onlinetradingconcepts.com/TechnicalAnalysis/RelativeStrengthIndex.html

Thanks for that.
Sorry to sound ignorant but where do you find RSI charts for all the different company's? (am very new to this) and trying to get my head around before actually investing any "real" money!

Eloise said:

HI
Is this something that is just personal opinion or is it an actual statistic?
Thanks in advance

Click to expand...

Both Its a personal opinion based on an actual statistic.

Here's an example of our ASX 200 index with Stochastics. When lines are in the bottom, they are 'oversold' and are 'cheap'...

http://finance.yahoo.com/q/ta?s=^AXJO&t=6m&l=on&z=l&q=l&p=&a=ss&c=

As you can see, things can stay in oversold for a VERY long time.

Don't pay too much attention to the muppets in the media. If they really knew what they're talking about they wouldn't be still working.

Hi Eloise,

There are several free charting programs around that include the RSI indicator (and a gazillion others). The one that I use is Incredible charts, but there are others. Most technical analysts use charting programs as tools of the trade (pun intended). More advance programs can be quite exxy so the free ones are a good way to learn the basics.

With these programs you can enter the code for any stock and play with the charts to your heart's content. The screenshot below shows the All Ords with the RSI plotted below. You can see the green line recently dipped below the oversold line (bold line set at 30). The All Ords rallied for a couple of days after this.

Be aware though, that you shouldn't go out and buy a stock based on what a single indicator is telling you. For every example of an indicator working, there are many examples of it not working, and there is much debate about their usefulness.