3 Top Nasdaq Pullbacks for Traders
Monday’s sell-off has helped push a number of strong stocks lower – and closer to where bargain hunters looking to scoop up stocks on sale want them. And with the Nasdaq being yesterday’s leader to the downside, I thought it would be a good place to start looking for some of the best, deepest and potentially most profitable pullbacks.
Of the three stocks in today’s report, two stocks have Short Term PowerRatings of 8 and one stock has a Short Term PowerRating of 9. Our research into short term stock price behavior indicates that stocks with Short Term PowerRatings of 8 have outperformed the average stock by a margin of more than 8 to 1 after five days. Stocks with Short Term PowerRatings of 9 have fared even better, outdoing the average stock by a margin of more than 13 to 1 over the same, short term time frame.
Let’s take a look at today’s stocks.
Overstock.com
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PowerRating) Short Term PowerRating 9. RSI(2): 16.74
Overstock.com has been trending higher for the past several weeks ever since the markets put in their bottom back in mid-March. OSTK has spent most of that rally bouncing between average Short Term PowerRatings and low, “consider avoiding” Short Term PowerRatings. But in recent days, having climbed above its 200-day moving average for good in mid-May, the stock’s pullback has been an occasion for its first high Short Term PowerRatings in many weeks.
World Acceptance Corporation
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PowerRating) Short Term PowerRating 8. RSI(2): 5.85
Take a look at the PowerRatings chart here of World Acceptance Corporation and pay particular attention to those instances when the Short Term PowerRatings of WRLD rallied to 8 or higher.
In both the first half of April and the second half of May, shares of WRLD had their Short Term PowerRatings upgraded from average levels to “consider buying” levels of 8 or 9. And in both cases, WRLD was significantly higher within 5 to 8 days. Recall that our research has found that the “sweet spot” for short term trading is between 5 and 8 days – though some short term trades can and do reach profitability sooner.
Triquint Semiconductor
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PowerRating) Short Term PowerRating 8. RSI(2): 3.79
If you’ll forgive me for saying so, we like big pullbacks and we cannot lie about it. And the pullback that has developed in Triquint Semiconductor of late is an example of the sort of move lower in an otherwise strong stock that has historically led to profitable trades short term stock traders.
TQNT has been moving in a sideways consolidation for the past month, which has helped relieve the overbought condition that stock developed weeks ago. And it is this sideways consolidation that the stock has broken free from – to the downside – in recent days. Note also the exceptionally low 2-period RSI of less than 4.
David Penn is Senior Editor of TradingMarkets.com.