Swing Trading: Overbought Conditions Subside as Profit-Taking Returns to Stocks
Better than expected earnings from both ^HD^ and ^WMT^ kept traders in those markets in a buying mood on Tuesday. Heading into trading on Wednesday, both stocks are short term overbought below the 200-day moving average, after closing higher for four days in a row.
Both stocks were also noted in yesterday’s 7 Stocks You Need to Know for Tuesday. To make sure you don’t miss a single issue, click here to get 7 Stocks You Need to Know delivered to you for free by e-mail every evening after the market closes.
Note also that ^DELL^ reported quarterly earnings after the close on Tuesday. The stock was lower by well over 3% immediately after the announcement, during which the company announced earnings that were better than expected, but sales that disappointed.
Here are 7 Stocks You Need to Know for Wednesday.
Scheduled to announce quarterly earnings on Wednesday are more retailers, including ^TGT^ and ^ANF^. Also scheduled to report is Deere & Company ^DE^.
Shares of Target rallied by nearly 2% in Tuesday’s trading. Trading below its 200-day moving average since February, TGT is now just outside of overbought territory below that level.
After closing higher for three days in a row, shares of Abercrombie & Fitch pulled back by 1% ahead of trading on Wednesday. ANF is trading above both its 5- and 200-day moving averages.
Pulling back by more than 1% – but trading below its 200-day moving average – were shares of ^DE^. DE has been trading below its 200-day since early June.
Profit-taking sent many financial shares lower ahead of Wednesday’s session. Down more than 4% were shares of ^BAC^, while ^JPM^ finished lower by more than 2%.
Traders looking for stocks pulling back above the 200-day moving average may want to keep their eyes on ^DECK^, which pulled back by more than 5% heading into trading on Wednesday, and ^PCLN^. Shares of PCLN retreated by 3% on Tuesday but, like DECK, are not yet technically oversold.
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David Penn is Editor in Chief of TradingMarkets.com