DataTrader: Short Term Edges Abound in 8×8 Inc.
There’s no doubt that when your primary criteria is stocks that have pulled back to levels from which they have tended to reverse and head higher, you never know what you’ll find.
8×8 Inc. (EGHT) is a communications equipment company that specializes in providing software and services to assist with everything from VoIP phone service to video conferencing. Among 8×8 Inc.’s competitors, for example, is the perhaps better known Vonnage (VG).
Why would a short term trader be interested in a stock like EGHT? For one, the stock is in bull market territory, trading above its 200-day moving average. Generally speaking, the data shows that buying stocks that are in bull markets (i.e., trading above their 200-day) outperforms buying stocks that are in bear markets (i.e., trading below their 200-day).
For two, EGHT has closed lower for three days in a row, four out of the last five. And during this pullback EGHT has finished in oversold territory for two days in a row heading into trading on Monday. Because of this, the stock is now cheaper than it has been in months (August, to be specific).
Third? While there’s no guarantee that EGHT will perform in the future as it has in the past, it is worth noting that the stock has responded well to short term pullbacks in recent days. After the last three-day retreat in the stock, early in the second half of September, shares of EGHT were higher by more than 2% one-day later, and higher by more than 3% three days later.
By the way, Vonnage, which I mentioned earlier is actually performing the exact opposite as EGHT. While EGHT is pulling back into oversold territory above the 200-day moving average, shares of VG are rallying into overbought territory below the 200-day moving average.
Quantified data and research on stocks like EGHT is available each evening after the market close. To learn more, click here.
David Penn is Editor in Chief of TradingMarkets.com