2007-01-09 17:16:29 · 4 answers · asked by FC 1 in Business & Finance ➔ Investing
The stochastics indicator is defined in the following way or a variation thereoff:
Stoch = (close - low in period)/(high in period - low in period)
The period corresponds to your trading timescale.
A result above 70 or 80 percent means that the stock is overbought, 20 to 30 that it is oversold.
Often the indicator is smoothed with a moving average but the idea is the same.
See here for some more explanation:
http://stockcharts.com/education/IndicatorAnalysis/indic_stochasticOscillator.html
2007-01-09 21:52:11 · answer #1 · answered by cordefr 7 · 0⤊ 0⤋
It's based on the break up value of the company vs. the price of the stock times the amount of outstanding stock. The break up value is determined if the company went up for auction, how much is it worth? Different people will give different answers, but they will all be fairly close. Therefore overbought and oversold is a matter of opinion.
2007-01-09 18:04:20 · answer #2 · answered by gregory_dittman 7 · 0⤊ 0⤋
Check up the high and low price reached. When the price come 33% close to the low price then it is oversold zone. When it reaches 66% of the high then it is overbought zone.
2007-01-09 22:48:29 · answer #3 · answered by Mathew C 5 · 0⤊ 0⤋
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2007-01-09 22:35:13 · answer #4 · answered by dinu_pawar 5 · 0⤊ 0⤋