Generally speaking, the rebound of the overall market during a decline can trigger short-term upward trends in some individual stocks, but this upward trend is extremely short-lived, and individual stocks also fluctuate in their rise and fall. If stock selection is improper, investors may be trapped once the market rebounds.

So, how can investors seize strong stocks during a rebound?

Short term severe oversold

Due to the pullback or rebound phase during the market downturn, the time for the stock index to rise is relatively short, usually only lasting for 3 to 7 trading days, which greatly limits the rise of individual stocks. So, stocks with significant short-term gains can only be generated in oversold stocks. The short-term decline of oversold stocks is usually more than 30%, and it would be even better if they could drop by 50%. It is best to choose stocks that have fallen for no reason and are short selling without quantity.

There is technical support available

Oversold strong rebound stocks are mainly grasped from a technical perspective, and the downward adjustment of oversold stocks should be an important technical support level, such as near the previous low point, near the golden ratio line, and near important moving averages.

We need the cooperation of trading volume

This is the key to the formation of an oversold strong rebound and an important characteristic that distinguishes it from other rebounding stocks. The daily trading volume on the first day of the rebound should be more than twice the daily trading volume of 7 days, and the daily trading volume thereafter should remain above the daily trading volume of 7 days. If the daily trading volume rapidly shrinks after reaching a daily high, it is often an important signal of a short-term peak.

Operation points for oversold rebound strong stocks

Due to the characteristics of sudden start, rapid rise, huge short-term gains, and short duration of maintenance of oversold strong stocks. So, once the market starts to decline, investors need to start preparing.

One is to constantly monitor the changes in the overall market, and once there are signs of a rebound in the market, take bold action;

The second is to constantly track oversold stocks. During the process of the overall market downturn, it is necessary to start the selection of oversold stocks. Once a stock experiences a surge in volume and there are signs of a rebound in the market, it is important to dare to act decisively at the start;

The third is to settle in a timely manner. When the trading volume of a stock rapidly shrinks after reaching a sky high, and the daily candlestick closes at a bearish candlestick, be careful not to see the stock price peak. When the stock price falls below the 3-day moving average, one should consider losing weight. If it falls below the 7-day moving average, the entire market should be closed.

It should be noted that when the market rebound ends, even if there is a loss, stop loss and leave the market. This is the iron rule for rebounding.