Definition
Labels for a market some believe has risen too far too fast (overbought) or fallen too far too fast (oversold).
The story
After a sharp run-up, you'll hear "it's overbought, due for a breather." After a sharp drop, "it's oversold." They're opinions about how stretched a move looks, not facts about what comes next. Markets can stay "overbought" for a long time.
Why you'll see it
Commentators use them after sharp moves in either direction.
Connects to
We explain why it moves markets. What you do with it is your call. Commentary and education only. Not financial advice. All terms