Stock Of The Day: Is PayPal Finally Coming Back To Life?

PayPal Holdings, Inc. (NASDAQ:PYPL) is quiet on Tuesday, as shares move higher after recently hitting an all-time low. A reversal may be underway, which is why PayPal is our Stock of the Day.

Traders should pay attention when things hit extremes. For example, on February 3, 135 million shares of PayPal traded. This was the highest single-day trading volume since PayPal went public.

This appears to have been a bullish dynamic for the stock. It shows that the sellers capitulated. They got so frustrated with watching the price fall that they decided to sell all of their shares regardless of the price.

After the dust settled, some investors and traders came to think that the news that drove PayPal lower was bad. But they also came to think that the market's move was an over exaggeration.

So they entered the market as buyers, but they had difficulty finding sellers. The sellers were gone.

This meant the buyers needed to be aggressive and willing to outbid others. They paid premiums, and this forced the shares higher.

In addition to the highest volume trading day ever, the stock also hit another extreme.

The lower part of the chart is the Relative Strength Momemtum Indicator (RSI). If the blue line is below the horizontal red line, it indicates oversold conditions.

The RSI was the lowest that it has ever been for this stock. It was the most oversold that it had been since it became public.

Traders need to take notice when there are extreme technical dynamics occurring in a stock.

Having traded the most volume ever on a single day while simultaneously being the most oversold in its history drew buyers into PayPal.  They may continue to move it higher.