Stock of the Day: Is This the Bottom for J.B. Hunt?

J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT) shares are higher Thursday. They fell more than 13% after the CFO said rising costs may hurt earnings. The move higher may continue. This is why J.B. Hunt is the Stock of the Day. The stock is at support and oversold. In addition, sellers may have capitulated. These could all be bullish dynamics that set the stage for a move higher. A seller’s capitulation occurs when frustrated sellers, sick of watching the price drop, throw in the towel and sell their shares regardless of price. As a result, a large amount of volume trades. The reason why this could be bullish is if buyers come into the market, they may have a difficult time finding sellers. They will have to aggressively outbid each other and push the price higher to draw sellers back into the market. J.B. Hunt is also oversold. This means emotional sellers have pushed it below its usual or typical trading range. This could draw buyers into the market. Many trading strategies are based on mean reversion. These buyers will be anticipating a reversion or move higher. Their buying could put upward pressure on the shares. The lower part of the chart is the Relative Strength Index (RSI). If the blue line is below the lower red horizontal line like it is now, it indicates oversold conditions. J.B. Hunt is also at a support level. As you can see on the chart, there is support around $235. Sometimes stocks rally after they reach support. This happens when some of the buyers who created the support become anxious and impatient. They start to raise their bid prices. Other impatient buyers see this and do the same. This can start a bidding war that could push the shares into an uptrend. J.B. Hunt is oversold and at support. There may also have been a seller’s capitulation. These conditions could set the stage for a move higher.