Down But Not Out: 5 Oversold Stocks for Traders
A snap-back rally to start the day on Thursday has boosted a number of stocks that began the session oversold, but have moved higher since the open. Fortunately, there are more than a few stocks that are still in pullback mode that traders should be looking at as possible trades.
Many times, stocks that look to be great opportunities after the market close react so quickly the following morning that they are difficult to buy on weakness. Part of this is completely understandable insofar as many of these stocks were very oversold when they appeared on our radar and were among the first to react to any renewed buying interest when markets reopened.
That said, the five stocks in today’s report all had high Short Term PowerRatings and low, 2-period RSIs as of the Wednesday close and have carried those attractive qualities forward into the first few hours of trading on Thursday. Let’s take a closer look at where these stocks are now, and how traders may take advantage of the opportunities they present.
Syniverse Holdings Inc.
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PowerRating) Short Term PowerRating 10. RSI(2): 0.575
Shares of Syniverse have been on one of the most impressive pullbacks I’ve seen in awhile. After soaring from $16 to nearly $23 in the first half of May, the stock developed the sort of low Short Term PowerRatings that we know often anticipate market pullbacks and corrections.
SVR pulled back briefly in late May, rallied, and then began an even deeper, sharper pullback over the first few days of June. During this time, shares of SVR closed lower for seven consecutive sessions leading up to its Short Term PowerRating of 10, which the stock has maintained for the past three days.
STEC Inc.
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PowerRating) Short Term PowerRating 9. RSI(2): 4.62
STEC Inc. spent most of the second half of April and all the first half of May moving higher, as the stock’s Short Term PowerRatings alternated between 2 and 1. Nevertheless, the stock continued to move higher until mid-May, when the stock’s low Short Term PowerRatings finally forced it into a sideways consolidation.
During STEC’s consolidation, the stock developed a Short Term PowerRating of 9, which anticipated the stock’s rebound – and retest of the highs – only a few days later. It is the pullback from that most recent advance that has provided the current opportunity in STEC.
Trimble Navigation Ltd.
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PowerRating) Short Term PowerRating 9. RSI(2): 0.75
Trimble Navigation broke out from a sideways consolidation in the second half of May and rallied strongly going into the end of the month.
This rally has led to a drop in the stock’s Short Term PowerRating, as the stock becomes all the more extended above its 200-day moving average. Since gapping lower on June 4th, TRMB’s PowerRating has begun to increase, moving from a 6 on the day of the gap down, to has high as 10 in recent days.
Myriad Genetics Inc.
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PowerRating) Short Term PowerRating 8. RSI(2): 1.00
Shares of Myriad Genetics broke out above their 200-day moving average back in the second half of May on their way to a high of nearly $50 by the end of the month.
This test of the $50 level – and the accompanying low Short Term PowerRatings – have helped set up the current pullback in MYGN, which has earned and maintained a Short Term PowerRating of 8 over the past three days.
Ultratech Inc.
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PowerRating) Short Term PowerRating 8. RSI(2): 4.47
UTEK has been in a largely sideways consolidation range since mid-May, and it has been the stock’s move toward the lower end of that range over the past week that has led to an increase in the stock’s Short Term PowerRating from 3 to 8.
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David Penn is Senior Editor of TradingMarkets.com.