Down But Not Out: 5 Oversold Stocks for Traders
Stocks are pulling back in the first hour of trading on Wednesday following yesterday’s strong close.
If you are looking for a theme among those stocks that are trading above their 200-day moving averages, but have pulled back significantly over the past few days, then that theme could be expressed in one word: energy.
One of the things I like about our TradingMarkets Indicators is how they provide an extensive list every day of the sort of stocks that can give traders a significant edge when looking to buy weakness and sell strength. But another use of our Indicators is simply as a market analysis tool.
I like to look at the Indicators page to get a quick gauge of the condition of the market in general. Are more stocks pulling back into oversold territory or rallying into overbought territory? Are there any sectors that are disproportionately represented?
It was the answer to this second question that struck me this morning as I looked at our “5 or More Consecutive Down Days” indicator and noticed that an overwhelming number of the stocks in this category were from the energy sector.
Traders are leaving these stocks in droves, and it will be interesting to see if what began as profit-taking turns into a more significant sell-off. If it does, it could present a significant opportunity for traders to take advantage of sales prices in formerly high-flying stocks.
Today’s report includes its share of energy stocks that have been down for 5 or more consecutive down days — as well as a few stocks from other industries such as electronics and building materials. Know that our research into short term stock price behavior indicates that stocks that are trading above their 200-day moving averages, and have been down for five or more consecutive days have outperformed the average stock in one-day, two-day and one-week time frames.
American Superconductor Corporation
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AMSC |
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PowerRating) Short Term PowerRating 9. RSI(2): 2.13
Ensco International Inc.
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ESV |
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PowerRating) Short Term PowerRating 9. RSI(2): 1.12
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Lincoln Electric Holdings
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LECO |
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PowerRating) Short Term PowerRating 8. RSI(2): 0.403
Oilsands Quest Inc.
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BQI |
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PowerRating) Short Term PowerRating 8. RSI(2): 3.62
Steel Dynamics Inc.
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STLD |
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PowerRating) Short Term PowerRating 8. RSI(2): 1.32
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David Penn is Senior Editor at TradingMarkets.com.