Find Stocks Pulling Back in Hot Sectors
Each day,
TradingMarkets publishes
7 Trading Ideas for Today, a selection of stocks from our daily indicators. TradingMarkets
Stock Indicators are based upon our latest quantitative research, and
highlight trading edges backed by our database of more than 7-million historically
simulated trades.
The Energy sector has been
one of the best-performing sectors this year with a gain of 21.4% as measured by
the performance in the Energy Select Sector ETF
(
XLE |
Quote |
Chart |
News |
PowerRating).Â
Successful traders are always looking at outside of the normal channels, which
may mean foreign stocks.Â
Norwegian integrated oil and
gas producer Statoil
(
STO |
Quote |
Chart |
News |
PowerRating) showed up as a candidate on our
Gaps Down 5% or More lists last Monday, May 14. One of the main tenets
of our trading philosophy here at TradingMarkets is to “buy weakness”.Â
Statoil was a stock pulling back within a hot sector, which gave us a
historically backtested opportunity to enter on the long side.
The Gaps Down 5% or More List are stocks that gap down by 5% or more and are trading above their
200-day moving average. Our research shows that stocks trading above their
200-day moving average that gap down by more than 5% have shown positive
returns, on average, 1-day, 2-days and 1-week later. Historically, these stocks
have provided traders with a significant edge. To learn more about our research
into stocks that gap down, and how to use this information,
click here.
If you had bought Statoil on
5/14/07 after appearing on both of our indicator lists here are the short term
results:
1-day later, STO closed
+0.0%
2-days later, STO closed +2.0%
5-days later, STO closed
+5.8%
Obviously,
results like these do not occur every time, but
our quantified research clearly shows that the edges exist during extreme
oversold or overbought conditions.
Check out our
latest quantified research articles
here. If
you don’t already have a TradingMarkets subscription,
click here
for a free 7-day trial. Check back daily for more 7 Trading Ideas for Today,
and develop your own watchlist of stocks with historically-backed edges.
Darren Wong
Associate Editor
Reminder: We are in no way recommending the purchase or short sale of
these stocks. This article is intended for education purposes only. Trading
should be based on your own understanding of market conditions, price patterns
and risk; our information is designed to contribute to your understanding.