Buying Back After an Oversold Drop: A Smart Trading Move?
The stock market is a battlefield of emotions, and when a stock like NVIDIA (NVDA) experiences a sharp decline after reaching a high of $153, it’s natural to wonder if it’s an overreaction. With today’s dip to $135.54, down 3.26%, it raises the question: Is this an oversold opportunity?
The Concept of an Oversold Market
A stock is considered oversold when it experiences a sharp decline in price, often accompanied by high selling volume. This typically occurs when market sentiment turns overly bearish, driven by factors like profit-taking, macroeconomic news, or technical breakdowns. However, an oversold condition often signals a potential rebound if the selling pressure subsides.
One way to determine whether a stock is oversold is through indicators like the Relative Strength Index (RSI) or Bollinger Bands. In today’s NVDA chart, the price touched the midline of the Bollinger Bands at $137.21, which can act as a short-term support level. If selling slows around this range, a bounce could follow.
Why Buying Back Makes Sense
Since you sold at $153, you locked in profits at the recent high. Now, with NVDA trading significantly lower, it makes sense to consider buying back at a discount. This classic sell-high, buy-lower strategy helps maximize returns while maintaining a disciplined approach.
Looking at previous price action, NVDA found support near $126.86, and while it may not drop that low again, today’s decline to $135 could present an opportunity if selling momentum weakens. If the market stabilizes and buyers step in, NVDA could reclaim the $140–$145 range in the short term.
What to Watch Before Buying More
1. Volume Confirmation: A slowdown in selling pressure or a rebound with strong buying volume suggests institutional support.
2. Technical Indicators: Watch for RSI nearing oversold conditions or a bounce off Bollinger Band midlines.
3. Market Sentiment: Broader market trends, interest rates, and earnings reports could impact NVDA’s movement.
If signs of stabilization emerge, averaging back in around $135 could be a profitable move before the next potential rally.
Would you consider adding more if it drops further$NVIDIA(NVDA)$
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
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