5 Top Nasdaq Pullbacks for Traders
With stocks poised to sell off again Tuesday morning, traders can afford to be discriminating in the pullbacks they pick to trade. Here are five of the better opportunities for buyers of weakness in the current market.
As I noted in a recent Conference Call, when markets show pronounced weakness, it can be difficult for traders – especially traders schooled in the merits of being a buyer when stocks have moved lower – to show the appropriate level of patience.
But in the same way that traders learn to resist the siren song of breakouts, traders who buy weakness need to be equally wary of buying stocks – even strong stocks – when the broader market is showing the sort of weakness we have seen in recent days.
So in considering these five candidates this morning be sure that the stocks remain sufficiently oversold (i.e., 2-period RSI’s of less than five as a minimum), and maintain their highest possible Short Term PowerRatings of 9 or 10. And if you do find a stock that looks right to you, be sure to let intraday weakness – the pullback after the pullback – ease you into the trade at the lowest possible levels.
World Acceptance Corporation
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WRLD |
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PowerRating) Short Term PowerRating 9. RSI(2): 3.70
Shares of World Acceptance Corporation have been moving lower since late May, ever since WRLD’s Short Term PowerRating was most recently downgraded to a 3 early in the second half of May. Previous PowerRatings upgrades have anticipated short-term two or three day rallies and such reactions are worth watching again in early July as WLRD’s Short Term PowerRating climbs from 8 to 9.
U.S. Concrete Inc.
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RMIX |
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PowerRating) Short Term PowerRating 9. RSI(2): 1.90
After spending much of May rallying on low Short Term PowerRatings, shares of U.S. Concrete Inc. have been correcting through the second half of July. As such, the stock’s Short Term PowerRatings have climbed to 9, where they have been for the past several consecutive days.
PMC-Sierra Inc.
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PowerRating) Short Term PowerRatings 9. RSI(2): 1.60
Shares of PMC-Sierra Inc. have been in pull back mode ever since the shares were downgraded to a 3 in mid-June. Since mid-May, in fact, downgrades to 3 or less in PMCS’s Short Term PowerRating have helped anticipate corrections in the second half of May and again in the first half of June – indicating good short-term buying opportunities in both instances.
Insituform Technologies Inc.
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PowerRating) Short Term PowerRatings 9. RSI(2): 14.97
Breaking down around the middle of June, shares of Insituform Technologies Inc. have been on a steady slide lower from $19 to $15. Over this time, the stock’s Short Term PowerRating has rallied to as high as 10 before settling in to the 9-rating the stock has sustained for the past two days as it tests its 200-day moving average.
U.S. Global Investors Inc.
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GROW |
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PowerRating) Short Term PowerRatings 9. RSI(2): 8.05
Three days of our lowest possible Short Term PowerRating finally brought in a short-term stop in shares of GROW early in the second half of June. The stock has only recently rallied above its 200-day moving average and the current pullback from the move above $19 has U.S. Global Investors Inc. testing that 200-day moving average level for support.
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David Penn is Senior Editor at TradingMarkets.com.