A stock is said to be bearish when its price has fallen successively week on week as investors react to market news. Such stock tends to fall into a low level where it becomes oversold.
Oversold means that stock prices have decreased substantially to a level sell orders aren’t strong enough to move the price down anymore. One of the overlooked advantages of stock prices in the oversold region is that they most times become undervalued and attractive to institutional investors.
As such a rare opportunity makes the stock a potential pick for bargain hunters and value investors (as long as fundamentals are intact), it is normal for prices to recover and reward early buyers.
Some Trade Examples You Should Learn From:
Zenith bank stock lost 46.25% of its value in one week (from 6th to 13th, March) – the stock dropped from N20 to N10.75, then recovered twice from that support level to N14, that’s like 40% price appreciation.
Another banking stock that rewarded early buyers as it recovers from dip was Access bank. The stock lost 40.26% of its market cap in just 9 days, from N9.04 to N5.4, before staging a comeback. You will notice that the stock rejected the N5.41 support level twice before appreciating bt 22% to N6,65