Find Stocks Historically Proven to Bounce
Each day, TradingMarkets publishes a new list of TradingMarkets
Stock Indicators, which are are based upon our latest quantitative research.
We will be featuring 1 list per day, free of charge, to help explain the
methodologies and to coach new users; these lists
highlight trading edges backed by our database of more than 7-million historical
simulated trades.
Today’s focus list from the
indicators is the
Stocks Down 10% or More list. These are stocks that have lost 10% or more
over the past five days and are trading above their 200-day moving average. Our
research shows that stocks trading above their 200-day moving average that have
lost 10% or more over the past five days have shown positive returns, on
average, 1-day, 2-days and 1-week later. Historically, these stocks have
provided traders with a significant edge.
Here is today’s focus list:
The recent selloff has given us a lot of stocks to work with. Using our
methodology, traders should always be “on alert” after a major selloff or
extended decline. If you are looking to take advantage of a buy-side edge
through extended weakness, then you should be ready to take advantage of optimal
market conditions following a major down move in the broader indexes.
Let’s take a closer look at one of these stocks. Keep in mind that this is
only one example from the focus list, and that we are not recommending a trade
on this particular stock. Traders should always create individual focus lists
and radar screens based on their own information and trading strategies, instead
of blindly following other people’s recommendations.
Steel Dynamics
(
STLD |
Quote |
Chart |
News |
PowerRating)
STLD is in a confirmed longer-term uptrend; the stock price is trading
well above the 200-day moving average, but price has fallen over 10% in the last
5 days. Many, if not all, traders are probably looking to get out of this “weak”
stock. However, our research clearly shows that the edge exists in this stock
right now on the long side. The TradingMarkets mantra is to “buy weakness, and
sell strength” because strong stocks have historically performed well after
falling steadily. The extended oversold conditions have historically led to
gains over the next 5 days.
Check out our
latest quantified research articles
here. If you don’t already have a TradingMarkets subscription, click here
for a free 7-day trial. Check back daily for 7 Trading Ideas for Today,
and develop your own watchlist of stocks with historically-backed edges.
John Lee
Associate Editor
Reminder: We are in no way
recommending the purchase or short sale of these stocks. This article is
intended for education purposes only. Trading should be based on your own
understanding of market conditions, price patterns and risk; our information is
designed to contribute to your understanding.