Overextension: When a Move Has Gone Too Far, Too Fast

Overextension describes a stock whose price has stretched unusually far from its own trend average, very quickly - a stock 20%+ above its recent moving average, for example.

Statistically, an overextended move becomes more likely to pull back or consolidate before continuing, simply because it has moved further than its own normal pace of movement can typically sustain.

This is exactly why BullYeah's Swing Rank formula includes an overextension PENALTY - a strong, high-scoring stock can still rank lower on the board if it looks stretched, because chasing it right now is a worse entry than a fresher, less-extended setup with a similar score.