Swing Trading: Are the Best Pullbacks Above the 200-Day in Retail?
This week I have been highlighting the fact that while most stocks were very much in pullback mode, many of the pullbacks in the retail sector have the benefit of being above the 200-day moving average.
This is very important. As our research indicates, stocks that pullback above the 200-day moving average tend to outperform those stocks that pullback below the 200-day. You can read all about this research in Larry Connors’ book, Short Term Trading Strategies That Work. (If you don’t owm a copy, you can get one for free here.)
We know that with stocks exceptionally oversold, there is a growing likelihood of a short term bounce. For traders looking for opportunities to take advantage of the potential near-term move higher, sticking with those stocks that have remained above their 200-day moving averages is a time-tested way to go.
Here are 7 Stocks You Need to Know for Friday
Today’s report is focused exclusively on those stocks that are at or near oversold territory above the 200-day moving average heading into trading on Friday.
First up is ^PCLN^. PCLN announced quarterly earnings after the bell on Thursday that were higher than analysts had expected. The stock had pulled back into oversold territory above the 200-day moving in Thursday’s session.
Additional selling will be required to take a number of retail stocks into oversold territory above the 200-day moving average. Among the retailers that could head into the weekend oversold after an additional down day on Friday are firms like ^COST^, ^TJX^ and ^ANF^.
Just one day after rallying to its highest levels of the year, shares of ^DECK^ pulled back by more than 11% ahead of trading on Friday. The stock, which trades above its 200-day moving average, is not yet in oversold territory.
Also pulling back above the 200-day but not yet in oversold territory are a number of restaurant stocks including ^CMG^, which pulled back by more than 4%, and ^MCD^. Shares of McDonalds have sold off for eight of the past nine days after the stock rallied to new yearly highs late in July.
Click here to get 7 Stocks You Need to Know delivered for free each evening after the market closes.
David Penn is Editor in Chief of TradingMarkets.com