Nasdaq Trading Strategies: 3 Oversold Stocks for Traders
Traders are in a bullish mood to start of the second trading week of March. The Nasdaq Composite — an hour into trading – is up more than 1%, the Nasdaq 100 slightly better.
On the Nasdaq ETF front, for those who are making ETF trading part of their daily trading strategy for avoiding single stock risk, the PowerShares QQQ Trust ETF
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PowerRating) began the day with a Short Term PowerRating of 6 and have also moved higher in the first hour of trading. The ProShares Ultra QQQ ETF
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This means that traders should not be surprised to see some strength in Nasdaq names, particularly those that have become dramatically oversold over the past several days. Among these Nasdaq stocks are Cypress Biosciences
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PowerRating), which has a Short Term PowerRating of 8 and a 2-period RSI of 2.07 as of Friday’s close. So far in trading today, CYPB is up more than 3% – though the stock has yet to cross above its 5-day moving average.
Another Nasdaq stock that traders looking to buy weakness may want to keep an eye on is Palm Inc.
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PowerRating). Also having a Short Term PowerRating of 8, PALM closed on Friday with a similarly ultra-low, 2-period RSI of less than 2. And traders have met those high Short Term PowerRatings and low 2-period RSI with buying interest Monday morning, bidding shares of PALM higher by more than 3% within an hour after the opening bell.
Lastly, Epiq Systems
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PowerRating) with its Short Term PowerRating of 8 and a 2-period RSI of less than 6, has not bounced in Monday’s trading the way Cypress Biosciences and Palm Inc. have. Traders looking for oversold stocks may want to note how Epiq Systems behaved the last time its Short Term PowerRating was upgraded to 8 or higher in both the first and second halves of February.
Recall that stocks with Short Term PowerRatings of 8, according to our research, have outperformed the average stock by a margin of more than 8 to 1 after five days. And those stocks that have 2-period RSIs of less than 2 have produced positive returns in one-day, two-day and one-week timeframes.
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David Penn is Editor in Chief at TradingMarkets.com.