Larry Connors will be teaching a new Volatility Spikes course on October 25 and 28, and this is your opportunity to learn the strategy that Larry considers to be the strongest he has ever created.
Click here for details and to register for one of our free upcoming live webinars where you will learn more about the Volatility Spikes Trading Seminar.
Stocks sold off sharply on Tuesday with SPDR S&P 500 ETF (NYSE: SPY) down 1.54% for the day. On the New York Stock Exchange, 75% of listed stocks ended down. On the NASDAQ, 78% of the issues traded closed lower. Some stocks have become deeply oversold and 43 stocks ended the day with ConnorsRSI readings below 5. The list below includes stocks with an average trading volume of 250,000 shares a day that have also been down for at least six days in a row.
Testing shows we should expect a stock to have a ConnorsRSI reading below 5 on just 0.63% of all trading days. This test was completed on approximately 6,000 highly liquid stocks from January 2, 2001 through February 28, 2014 and the results are presented in An Introduction to ConnorsRSI, 2nd Edition, which can be downloaded for free here.
On average, after the ConnorsRSI reading on a stock falls below 5 we have seen a gain of 2.15% over the next five days.
Some of the stocks listed above, such as Nucor Corporation (NYSE: NUE), have been on extended losing streaks. The longer a trend continues, the more likely it is to reverse and after nearly three weeks of consecutive down days, NUE should be considered a potential buy.
Now let’s look at the most overbought and oversold stocks (according to ConnorsRSI) heading into trading for October 8, 2014. ConnorsRSI is a proprietary and quantified momentum oscillator developed by Connors Research that indicates the level to which a security is overbought (high values) or oversold (low values).
SCSC (Scansource Inc) is the most oversold stock for the second day in a row with a ConnorsRSI reading of 0.92.
EWG (Ishares MSCI Germany Index) is the most oversold non-leveraged ETF with a ConnorsRSI reading of 1.69.
GASL (Direxion Nat Gas Bull 3X) is the most oversold leveraged ETF with a ConnorsRSI reading of 2.01.
BDX (Becton Dickinson and Company) is the most overbought stock with a ConnorsRSI reading of 96.12.
For the second day in a row, CORN (Teucrium Corn) is the most overbought ETF with a ConnorsRSI reading of 94.96.
TradingMarkets Lists provide users pre-populated lists of stocks and ETFs identifying symbols with overbought and oversold ConnorsRSI and Bollinger Bands® readings. The Screener Lists are powered by The TradingMarkets Screener.
All data is as of the end of day on 10/7/2014.