Stock Of The Day: Is This The Bottom For Apollo Global Management?

Apollo Global Management, Inc. (NYSE:APO) shares were trading lower on Tuesday morning. The shares had been in a freefall. But they may be at a potential bottom.

They are oversold on both a short-term and a long-term basis. They are also at a support level. This is why Apollo is the Stock of the Day.

• What’s driving APO shares today?

When a stock is oversold, it is because emotional and aggressive sellers have pushed the shares below their normal or typical trading ranges. This can be an important dynamic.

Many trading strategies are based on the concept of reversion to the mean. If a stock goes too far in one direction, there is a good chance that it reverses and heads back the other way.

If a stock is oversold, it will draw buyers into the market. They will be anticipating a reversion or move higher. Their buying could push the shares up.

One tool a trader can use to determine if a stock is oversold is the Relative Strength Index (RSI). There are two of these indicators on the lower part of the chart.

The RSI calculates how much a stock has moved in the past 14 time periods. If the blue line is below the horizontal red line, it indicates oversold conditions. As you can see, that is the case on both of the RSI indicators.

The top RSI measures a short-term time horizon.  It reflects how much the shares have moved over 14 days.

The lower RSI on the chart covers a long-term time frame. It shows how much the shares have moved over 14 weeks.

Being oversold on both of these time horizons could be bullish for Apollo.  These conditions will draw both short-term traders and longer-term investors into the markets as buyers.

And their buying could put a floor under Apollo. The downtrend may finally be over.

Photo: Piotr Swat via Shutterstock