AT&T Inc. (T) shares are flat on Monday. But there's a chance they're about to head higher.
The stock is oversold and sitting at a support level—two dynamics that can be bullish. That's why AT&T is our Stock of the Day.
When a stock is trending lower, the market is out of balance. There's more supply (shares for sale) than demand (buyers). Sellers have to undercut each other to attract buyers, pushing the price down.
That's a downtrend.
But when a downtrend hits a support level, it often pauses or reverses. At support, demand outweighs supply. Sellers can unload shares without pushing the price lower.
On the chart, AT&T has support around $22.75. That level held in January, and many who sold there regretted it when the stock rallied. Some of them decided they'd buy back at that same price if they got a second chance. Now that AT&T has dropped back, those buy orders are creating a floor.
The stock is also oversold—meaning it's trading below its typical range. That tends to attract buyers looking for a reversal. Their buying can push the price back up.
Stocks often rally off support levels. When some of the traders who created the support get impatient, they start outbidding each other. That creates a snowball effect, forcing the stock into an uptrend.
Being oversold while at support can set the stage for a move higher. AT&T may be about to rally.
