Stryker Corporation (NYSE:SYK) shares are trading sideways on Monday. But that wasn't the case on Friday. They dropped almost 6.5% after the company reported its earnings.

But the selloff may be over. There may even be a reversal. This is why Stryker is the Stock of the Day.

Many trading strategies and models are based on the concept of reversion to the mean. If a stock or security gets overextended in one direction, traders will be anticipating a reversal or reversion.

If a stock is oversold, like Stryker is, traders will come into the market as buyers because they will be expecting a move higher. Their buying could force the shares up.

The red line on the chart is two standard deviations below the 20-day moving average. According to statistics and probability theory, 95% of trading should occur within two standard deviations of the mean.

If a stock exceeds this threshold to the down-side like Stryker has, it is considered to be oversold. This will draw buyers into the market.

The shares are also at a price level that may provide support.

As you can see, this price was a resistance level in 2023. And sometimes, a price that had been a resistance level can turn into a support level.

There are investors and traders who sold at this level who were glad they did when the price dropped after.

But when this resistance was broken, a number of these investors and traders changed their minds. They decided that selling was a mistake.

Some of them also decided that if they could ever do so, they would buy their shares back at the same price they were sold for. Now that the share has finally dropped back to this level, they will place buy orders.

If there is a large quantity of these orders, it will create support at the level.

This combination of being oversold while at support can be a bullish dynamic. Stryker may be about to rally.

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