The problem in this current market is that it's way too edgy. One hint of any problem, whether minor or major, can often drive investors to the exits, selling the stock like a fire sale. Now, don't get me wrong, sometimes stocks clearly deserve the wrath of investors, but many other times they do not.

 An example of this, in my opinion, is ATI Technologies Inc. (NASDAQ/ATYT), which got whacked after warning investors in early June to expect lower sales in its third quarter.

 This maker of advanced 3D graphics and digital media silicon solutions plummeted to a 52-week low of $11.20 on July 7, down 49% from its December 2004 high of $20.66.

 The selloff appears to be overdone, driven by the extreme nervousness of investors. It doesn't take much to rock a stock in this current investment climate. So, what do you do?

 Given the price decline, now may be an opportune time to buy shares or trade this mid-cap and, in the process, hope for a rebound, as the stock is technically oversold. So far, it has played out this way, as shares of ATI have rebounded 19% since dropping to a low only a few days ago.

 In this case, as in some others, ATI was sold off with little regard. In spite of the warning, ATI remains a dominant player in its area, in spite of its competition with NVIDIA Corp. (NASDAQ/NVDA).

 In the third quarter, year-over-year revenue growth was a disappointing 8%, well below its forecast. Operating earnings came in a penny below estimates and well below the prior year's profits.

 Technically, ATI appears to have some support at the $11 range. It was technically oversold last week, but made a strong bounce on July 11, breaking back above the key 20-day moving average at $12.49 and eyeing the 50-day moving average at $14.01. Sustained strength could see the stock break to its 100- day and 200-day moving averages at $15.49 and $16.79, respectively. Consider the upper moving averages as the upside near-term technical targets. Downside support is found at the 20-day moving average and the 52-week low of $11.20.

 ATI demonstrates the extreme side of irrational selling. Astute traders jumping on the opportunity could have made a quick 19% in less than a week, an excellent return for swing traders.

 The key in witnessing a selloff is to carefully evaluate the reasons for the selloff and the position of the company. Good companies sometimes hit a hurdle, but opportune traders always take advantage.