Oversold / Overbought

Oversold and overbought describe when a stock's price has moved to an extreme in one direction, suggesting it may be due for a reversal. You'll hear these terms when traders use momentum indicators—tools that measure how fast a stock is moving—to spot potential turning points. Overbought means the price has risen so sharply that it looks unsustainable and might pull back down. Oversold is the opposite: the price has fallen so steeply that it could bounce back up. For example, if TechCorp stock plummeted 30% in two weeks on panic selling, traders might call it oversold and bet on a recovery. These aren't guarantees—they're just signals worth watching when you're researching stocks.