One of the best ways to spot opportunity is by spotting excessively oversold technicals.
Look at Advanced Micro Devices (SYM: AMD), for example.
In late April, the stock became oversold on RSI, MACD, and on Williams’ %R. All of which told us, the pullback was overdone. Shortly after, it would bounce from its oversold price of about $140 to $182.84. The key to knowing when to pull the buy trigger is for all three of those indicators to align in oversold territory together.
Let’s start with RSI. Once RSI dips to or below its 30-line, it’s considered oversold. But we never want to rely on just one indicator, so we add in excessive dips on MACD, which we got in late April as well. To confirm again, we can look at Williams’ %R. With this indicator, once it dips to or below its 80-line, it’s also telling us the stock is excessively oversold.
Better, when all agree at the same time, buy.
Look at Tesla (TSLA).
When it dipped to $140, we knew it would soon bounce back just by watching what RSI, MACD and Williams’ %R were telling us at the time. Better, if you bought the excessive pullback at $140, you’re now up about $124 a share as TSLA passes by $264 a share.
Even better, if you pull up a chart of any index, stock, or ETF with these three indicators alone, you’ll see how much easier it is to spot opportunities.