Positive Edges Grow as Ameritrade, TiVo Pullback

With stocks pulling back at midweek, here are a pair from the Nasdaq that have begun to trade at levels where buyers have historically come off the sidelines to bid shares higher.

Rallying to new, six-month highs in the second half of March, shares of TD Ameritrade (NASDAQ: AMTD) have pulled back in a series of multi-day selling streaks as traders and more active investors have taken profits. Not only have shares of AMTD closed lower for four days in a row, the stock has finished in the red for eight out of the last ten sessions, and is back at technically oversold levels ahead of trading on Thursday.

AMTD opened Wendesday morning with neutral ratings of 6 out of 10. But a ratings upgrade intraday has put the stock one-point below our “consider buying” category of stocks that have tended to outperform the average stock in the short-term. Ameritrade has a significant, short-term positive edge of more 1% after pulling back by more than one and three-quarters of a percent on Wednesday.

The current leg down in AMTD comes after a rally from a previous trip to oversold territory. Then, a four-day pullback at the beginning of April ended with a pair of oversold closes, and a short, two-session snapback rally immediately afterward that sent AMTD higher by well over four and a half percent.

Also trading lower ahead of Thursday’s open are shares of TiVo Inc (NASDAQ: TIVO). Like AMTD, TIVO was last oversold at the end of a pullback that began at the beginning of the month. A retreat during which the stock closed lower for five out of six trading days led to a gain of more than two and a half percent over two days.

As of Wednesday’s finish, shares of TIVO are down four in a row and are newly oversold in bull market territory. Opening with a 7 out of 10 rating, TiVo Inc. earned an intraday upgrade to a “consider buying” 8 out of 10, and has a positive edge of nearly 1% in the short term.

Overall, the Nasdaq Composite is very much in neutral territory after reversing back to the downside on Wednesday. Should traders continue to sell over the balance of the week, the likelihood of the Nasdaq finishing the week oversold would be sizable. This could help stocks like AMTD and TIVO pullback to more extreme levels where their prices may become almost irresistible to short-term traders looking to buy weakness in bull markets.

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David Penn is Editor in Chief of TradingMarkets.com