Should Traders Buy the Selling in Growth Stocks? 5 Stocks for the Next 5 Days
Before taking a look at the stocks with some of the biggest edges heading into the second half of the trading week, a quick recap of some of the stocks from our last 5 Stocks for the Next 5 Days column.
Shares of Akamai Technologies (AKAM), for example, have been falling almost ever since we highlighted the stock as short term overbought a week ago. It only took three days after AKAM appeared in 5 Stocks for the Next 5 Days before sellers had sent the stock down by more than 2%.
Three days was also all it took to turn the market for shares of Netflix (NFLX) from an overbought market to a nearly oversold one. NFLX fell by more than 4% before closing below its 5-day moving average where traders were able to cover their positions on weakness.
With regard to Amazon.com (AMZN), an additional day was required compared to AKAM and NFLX. But overbought conditions in this stock also managed to attract sellers, sending shares of AMZN lower by more than 5% on Wednesday alone.
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Here are 5 Stocks for the Next 5 Days
One stock from last week’s list, Green Mountain Coffee Roasters (GMCR) was headed toward oversold territory when we last highlighted the stock. GMCR bounced to finish last week’s trading, but began selling off sharply when the new week began. This selling has put GMCR deeply into oversold territory.
Down three in a row and finishing in oversold territory ahead of trading on Thursday are shares of Lululemon Athletica (LULU). The growth stock was last at similar levels near the beginning of the month, shortly before gaining for five out of the next seven trading days to finish at a new short term high.
A single 3% sell-off was enough to send shares of Chipotle Mexican Grill (CMG) to levels at which the stock has historically found enough buying interest to make significant short term gains. See similar pullbacks above the 200-day in CMG in both early October and mid-August. With traders taking profits from the stock’s recent short term rally, additional weakness over the next few days should take no one by surprise.
Like Issac Newton’s famous apple, shares of Apple Inc. (AAPL) plunged on Wednesday, falling from recent year-to-date highs to finish lower by more than 5% heading into the second half of the trading week. Wednesday’s close marked the stock’s second lower close in the past three days, and any significant follow-through selling likely will be enough to take the stock back to technically oversold territory.
Also down two out of the past three trading days are shares of Amazon.com (AMZN). The stock pulled back by 5% on Wednesday to finish near 7-day closing lows, but is not yet technically oversold. The last time shares of Amazon.com finished in oversold territory was on the first trading day of October, shortly before embarking on a seven-day win streak that took the stock to near its highest levels of the year.
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David Penn is Editor in Chief of TradingMarkets.com