5 Down But Not Out Stocks for Traders: DROOY, GMO, ILMN, AUXL, CHNR
Everyone wants good merchandise at good prices: why should stocks be any different?
I’ve written before that traders are never more bearish than they are when stocks are down big. You can hear it in their voices, see it in their body language, even feel the anxiety radiating from them if you stand too close. And from the point of view of a trader who is long a stock that is lower by 1%, then 3%, then 6%… it isn’t hard to understand why.
But the fact of the matter–as we point out in our special Free Report, “5 Secrets to Short Term Stock Trading Success” (click here
to request your copy)–is that falling markets should not necessarily be a source of woe for traders, especially short-term traders who look to buy weakness and sell strength. When otherwise strong stocks suddenly come under fire from sellers, savvy short-term traders know that it is time to think about buying, not selling.
There may be few things harder psychologically than buying a stock after it is down big. But our research into short-term stock behavior tells us that this is precisely the mental jiu jitsu that winning traders must do in order to stay one step ahead of the market. Winning traders are long stocks BEFORE they start to move higher. And as for the traders who wait for those stocks to move higher before they are willing to buy, guess whose shares those late-arriving traders are buying? Those of traders who were confident enough to have bought when the stocks were low, that’s who.
We use a number of indicators, which we call our
TradingMarkets Stock Indicators, to let us know when stocks have moved low enough, oversold enough in trading parlance, to become attractive candidates for short-term trades. This list of indicators is updated daily and includes 16 different metrics by which traders can determine when markets have become overextended to the upside or downside and, thus, are likely to experience a reversal.
The five stocks in today’s discussion all appeared on our list of indicators under the category of stocks that were down 10% or more over the past five days. These are stocks that have been hit, and hit hard, which is one of the basic requirements for buying stocks on weakness.
Click here
to read our research into stocks that are down by 10% or more after five days.
One caveat to buying weakness, especially when the broader markets are displaying significant weakness by trading below their 200-day moving averages, is to make sure that you are buying the right kind of weakness. What I mean by that is that, when trading in the short-term, look to buy stocks that have pulled back, but are still trading above their 200-day moving averages. While in general stocks that are down big tend to come back big when they bounce, using the 200-day moving average as a filter turns a general observation about short-term stock behavior into a truly valuable indicator for zooming in on the best stocks to trade at any given time.
DRD Gold Ltd. ADRs
(
DROOY |
Quote |
Chart |
News |
PowerRating). Short Term PowerRating 8.
Idaho General Mines
(
GMO |
Quote |
Chart |
News |
PowerRating). Short Term PowerRating 8.
Illumina
(
ILMN |
Quote |
Chart |
News |
PowerRating). ShortTerm PowerRating 8
Auxilium Pharmaceuticals
(
AUXL |
Quote |
Chart |
News |
PowerRating) Short Term PowerRating 8
ChinaNatural Resources
(
CHNR |
Quote |
Chart |
News |
PowerRating). Short Term PowerRating 9
I want to repeat my encouragement for you to take a look at our special, Free Report on short-term stock trading, “5 Secrets to Short Term Stock Trading Success.” If you are fed up with losing money trying to trade breakouts and breakdowns, our free report will show you how traders have made money buying low and selling high for decades. Click here
to request your free report–or call us today at 888-484-8220.
David Penn is Senior Editor at TradingMarkets.com.