Spanish Stocks Oversold Despite Good Economic News

Economic conditions in Spain have improved enough for the country to sell €10 billion in bonds. The country actually received bids for €40 billion worth of bonds, prompting government officials to note that “funding conditions for Spain have normalized.” The Spanish economy returned to growth in the third quarter of 2013 and the 0.3% increase in GDP in the fourth quarter was the strongest in more than six years.

Stock market investors do not seem to share the enthusiasm of bond investors. iShares MSCI Spain Capped (NYSE: EWP) is oversold with a PowerRatings of 9.


PowerRatings are based on the relative strength or weakness of particular stocks or ETFs. The higher the rating, the greater the one week historical gain has been for stocks and ETFs with that rating. For best results, enter trades on stocks with a PowerRatings of 8 or higher with a limit order 3-7% below the previous day’s closing price. Higher % limit entries have historically shown a greater percentage of winning trades but higher % limit orders also reduce the chance of trade execution.

In the past, buying stocks with a rating of 9 on a 3% pullback the next day and selling five days later has been profitable 75% of the time. The average winner has gained 4.3%. Other entries and exits also show high winning percentages and large average gains.

ConnorsRSI confirms that EWP is oversold with a reading of 14.18. Trading Market Analytics offer a convenient screen to show the status of indicators including ConnorsRSI, Bollinger Bands ® (%b) and 2-period RSI at one glance. ConnorsRSI readings below 20 are considered oversold.

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All data is as of the end of day on 1/22/2014.