Down But Not Out: 3 Oversold Stocks for Traders
Extremely oversold conditions in stocks have encouraged buyers to emerge from the sidelines and short sellers to cover their often very-profitable positions.
Given how oversold the market were, it shouldn’t be much of a surprise to see stocks moving higher early in trading on Thursday. Short term traders planning trading strategies around these conditions should keep this in mind as they look to either buy into stocks that are still oversold and are waiting the arrival of buyers or to wait for stocks to shift from oversold to overbought conditions. In the latter example, the sound strategy of course is to either short overbought stocks or to use inverse ETFs.
Geron Corporation
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PowerRating) Short Term PowerRating 8. RSI(2): 8.78
In today’s column, I wanted to focus on some of our key TradingMarkets indicators, indicators which when combined with Short Term PowerRatings can highlight especially promising potential trades. For example, today I looked at stocks that were trading above their 200-day moving averages, but had declined by 10% or more over the past five days.
LaBranche & Company Inc.
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PowerRating) Short Term PowerRating 9. RSI(2): 23.70
Our research into short term stock price behavior indicates that stocks that are otherwise strong (i.e. trading above their 200-day moving averages), but have pulled back by 10% or more represent some of the superior oversold opportunities for short term traders. These stocks, according to our testing, have produced positive returns in 1-day, 2-day and 1-week timeframes.
And when combined with high Short Term PowerRatings of 8 or higher, these stocks become all the more worth watching for short term traders.
Cheniere Energy
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PowerRating) Short Term PowerRating 8. RSI(2): 10.34
All three stocks in today’s report not only are trading above their 200-day moving averages with pullbacks of 10% or more. Also all three have Short Term PowerRatings of 8 or 9. We found 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. Stocks with Short Term PowerRatings of 9 have fared even better, besting the average stock by a more than 13 to 1 margin over the same time period.
Does your stock trading need a tune-up? Our highest Short Term PowerRatings stocks have outperformed the average stock by a margin of nearly 17 to 1 after five days.
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Whether you have a trading strategy of your own that could use a boost or are looking for a way to tell the stocks that will move higher in the short term from the stocks that are more likely to disappoint, our Short Term PowerRatings are based on more than a decade of quantified, backtested simulated stock trades involving millions of stocks between 1995 and 2007. Click the link above or call us at 888-484-8220, extension 1, and start your free trial today.
David Penn is Editor in Chief at TradingMarkets.com.