Stock Of The Day – Rally Time For Procter & Gamble?

Shares of Procter & Gamble Company PG are trading sideways Wednesday. However, they are oversold and at an important support level, which suggests they may be on the verge of a rally.

Our trading team has made PG our Stock of the Day because stocks that are oversold and at support tend to move higher.

‘Oversold' means that a stock has been aggressively sold and pushed below what would be its normal or average trading range. This is an important dynamic. Some traders will be expecting a reversion or move back into the range.

They will enter the market as buyers and put upward pressure on the shares. This could move the stock higher.

The red line on the chart is a Bollinger Band. It is two standard deviations below the 20-day moving average. If a stock exceeds this threshold to the downside, it indicates oversold conditions.

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As you can see, that's the case now with Procter & Gamble.

The stock is also at a support level. Support is a large group of investors and traders who are looking to buy shares at or close to the same price.

Sometimes, when stocks are at support, they rally off of it. This happens when some of the people who created the support with their buy orders start to outbid each other. They know the sellers will go to whoever is willing to pay the highest price.

They don't want to miss the trade, so they increase the prices they are willing to pay. Other buyers do the same. It results in a bidding war that forces the stock into an uptrend.

The last five times that P&G got below the Bollinger Band and close to support around the $158.00 level, a rally followed. Now the shares are oversold and at this important support level once again.

There is a good chance that the stock is about to make a sixth move higher.

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