Aside from the selling in the energy sector, it was technology that has sellers working at an aggressive pace on Wednesday. Down three days in a row and nearing oversold territory are shares of the ^TYH^, which pulled back by more than 5% on Wednesday alone.
Weakness in semiconductor stocks helped anticipate much of the broader selling now spreading throughout the technology sector (see our “A Closer Look at the Selling in Semiconductors” from earlier in the week). Closing lower by more than 2% ahead of trading on Thursday, shares of ^CSCO^, for example, have now finished lower for three days in a row and are oversold above the 200-day moving average. Also lower for third consecutive session and oversold after dropping by more than 1% were shares of ^INTC^. INTC is also trading in bull market territory.
Even ^AAPL^ has been unable to buck the selling trend in recent days. The stock has finished down for three sessions in a row, and is oversold for the first time since the pre-Thanksgiving holiday lows. Shares of Apple pulled back by more than 2% on Wednesday.
Heading into Thursday’s session, Cisco and Intel have earned ratings upgrades to 7 out of 10. At the upper end of our “neutral” category, both stocks will need to sell-off even further before they will have returned to levels where buyers have become interested in the stocks in the past. During the pullback in Intel in the first half of November, for example, shares fell for six consecutive sessions before becoming oversold enough to lure buyers back into the market. From the final days of September to the first few days of October, AAPL closed lower for seven in a row before a short-term low was made. Shares of Apple have neutral, 6 out of 10 ratings as of Wednesday’s close.
Traders can accommodate this volatility by looking to enter positions with wider than usual intraday entries, for example, looking for markets to pullback by more than 3% on an intraday basis before buying. Another approach is simply to be more discriminating, choosing both fewer and higher rated stocks for short-term trade, until edges are larger and more abundant.
All of the stocks in today’s report were available from research and data available through PowerRatings. To learn more, click here.
David Penn is Editor in Chief of TradingMarkets.com