5 PowerRatings Stocks for the Next 5 Days: ROH, LG, EPIQ, GVA, COGT
Stocks slid lower on the first trading day of the week, creating a fourth consecutive lower trading day for both the S&P 500 and the Dow Industrials.
In my last column, I pointed to the fact that the VIX, or CBOE Volatility Index, was suggesting that this might not be the best time to be long stocks. Specifically, citing the research by TradingMarkets founder Larry Connors, I noted that when the VIX is stretched more than 5% below its 10-day moving average, stock have tended to underperform.
Larry’s research on this topic goes back to 1995, a pretty good track record which includes some pretty large extremes in the VIX, both to the upside and the downside.
Right now, the VIX is stretched more than 10% below its 10-day moving average.
At the same time, it is worth pointing out that stocks are increasingly oversold. With four consecutive down sessions in both the S&P 500 and the Dow industrials, this is not a surprise. I’m also seeing an increase in the number of Short Term PowerRatings stocks — a few of them listed below — that are both above their 200-day moving averages and have PowerRatings of 8.
So, how do we square this circle?
The VIX is clearly suggesting that the relative complacency in the market is making stocks in general vulnerable to the downside. The stocks that are appearing as potential trades to the long side have already been under selling pressure. We are looking at a scenario where broader market weakness may create opportunities in certain stocks — those, for example, that are already oversold and have high Short Term PowerRatings …
Rohm & Haas Company
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ROH |
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PowerRating) Short Term PowerRating 8. RSI(2): 15.28
Laclede Group Inc.
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LG |
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PowerRating) Short Term PowerRating 8. RSI(2): 29.26
Epiq Systems Inc.
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EPIQ |
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PowerRating) Short Term PowerRating 8. RSI(2): 13.37
Granite Construction Inc.
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GVA |
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PowerRating) Short Term PowerRating 8. RSI(2): 4.56
Cogent Inc.
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COGT |
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PowerRating) Short Term PowerRating 8. RSI(2): 10.56
Recall that our research 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.