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money guidance and how to get rich_173![]() Navigation: Main page » money guidance and how to get rich Author: money guidance and how to get rich What does it mean when a financial guru on television says that a stock is "overbought"? The term "overbought" suggests that too many people were trying to buy the stock, sending the share price higher than it should be. The guru is essentially making a short-term call on a stock price, which is most likely futile. Why would a stock close at one price on one day, but then commence trading the next day a few dollars lower? Stocks often open higher or lower if there's been some major news released after the market close the day before. For example, if the underwater dress shoe company Wet Loafer Inc. (ticker: SQSHY) announced it was recalling all its wingtips, many more sell orders than buy orders might accumulate overnight. Before trading begins, the share price would probably be adjusted southward, to better match buys with sells. |
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