3 Stocks to Avoid this Week
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 5+
Consecutive Higher Highs list. These are
stocks that have made a higher high for five or more consecutive days and are
trading below their 200-day moving average. Our research shows that stocks
trading below their 200-day moving average that make higher highs for five or
more days have shown negative 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 significantly narrowed the
universe of stocks which are eligible for this list. Were the market in the
midst of a massive rally, this list would be much longer, as more stocks would
be making new consecutive highs, day after day.
Let’s take a closer look at one of these stocks:
Citizens Banking Corporation
(
CRBC |
Quote |
Chart |
News |
PowerRating)
CRBC is a prime example of a stock that is
in an overall downtrend. It is easy to see, just by looking at a chart with no
moving averages, that this stock fell through the month of May. Starting around
June 5, CRBC seemed to find some support, and started to rally back up to near
the $20 range. After making 5 consecutive higher highs, this downtrending stock
is in a historically-based weak position. When a weak stock starts to rally, and
that rally becomes extended, traders should totally avoid that stock, or begin
to look for shorting opportunities. Even though CRBC made new highs on June, by
the end of the day, the stock had closed lower.
Check out our
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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.