Up With Intel’s Downgrade!
A downgrade to “market perform” helped encourage a fifth day of selling in the market for shares of Intel Corporation (INTC). The stock, which has been trading consistently in bull market territory since early October, pulled back by more than 1% ahead of trading on Wednesday.
Finishing for two days in a row oversold, INTC last traded in oversold territory at the beginning of the month. Then, a four-day pullback led to a rally of more than 4% over the following four days.
Shares of Intel have a positive edge of more than 1% heading into trading on Wednesday. The stock is trading at its lowest level in nearly a month.
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One of the leading stocks in the S&P 500 on Tuesday was trading at new short term lows just a few days ago. This same stock had closed lower for four days in a row last week, three of those finishes in oversold territory. And now heading into the middle of the holiday-shortened week, shares of this stock, Biogen Idec (BIIB) are up more than 5%.
The rally in Biogen Idec was moment of mean reversion clarity in a market that was tossed higher and lower by rumors of an IMF rescue plan in Europe. If anything, the suddenness of the buying intraday on Tuesday suggests a market that is interested in moving higher in the short term given even the thinnest of rationales.
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Are there other stocks poised to make the same sort of bull market bounce that Biogen Idec did? In addition to Intel above, there are a number of stocks trading in bull market territory that have pulled back to levels where they have historically been able to attract short term buying.
One example is Google (GOOG). Google traded lower for four days in a row ahead of Tuesday’s session, and, little changed on the day, GOOG remains oversold short term. Google has a positive edge, having pulled back to new short term lows for a third consecutive sesion.
On a side note, traders may want to be vigilent to the end of the month effect, especially as the professionals return to the market following the Thanksgiving holiday. If stocks enter that period oversold, then the likelihood of buyers entering the market is that much greater.
The stocks in today’s report were drawn from the data and research available through The Machine. To find out more, click here.
David Penn is Editor in Chief of TradingMarkets.com