Swing Trading: Will Oversold Markets Find End of Month Strength?
Oversold conditions in the stock market moderated on Monday as buying in stocks like Hewlett-Packard (more on HPQ below) helped keep the major averages aloft. Should sellers return soon to push stocks back to oversold levels then, historically speaking, traders should not be surprised by a subsequent, short term move higher courtesy of the end of month effect over the following days.
Read more about the End of Month effect in the book by Larry Connors, founder and CEO of TradingMarkets: Short Term Trading Strategies That Work: A Quantified Guide to Trading Stocks and ETFs. If you don’t have a copy, you can get one for free here.
*
Shares of ^GS^ plunged by well over 4% ahead of trading on Tuesday, selling off late in the day on Monday after news broke that the CEO of the investment bank had hired a so-called “high-profile defense attorney.”
Scheduled to report quarterly earnings on Tuesday is ^HNZ^. The stock edged higher in Monday’s trading after closing lower for the past two days. Down more than 4% since closing in overbought territory below the 200-day last week, Medtronic is also scheduled to report quarterly earnings on Tuesday.
Swing traders using PowerRatings may want to keep an eye on top-rated stocks like ^WYNN^ and ^LVLT^, both down three in a row and closing in oversold territory above the 200-day (learn more about swing trading stocks using PowerRatings here).
Here are 7 Stocks You Need to Know for Tuesday.
Up nearly 2% after pulling back into oversold territory above the 200-day moving average were shares of ^MA^. ^V^ was slightly higher after pulling back for four days in a row, two in oversold territory.
In addition to HNZ, other food and beverage stocks trading above their 200-day moving averages include ^KFT^ and ^UL^. KFT has continued to pullback from long-term highs reached in early July. Shares of Unilever gained more than 1% despite closing well of session highs.
^HPQ^ was the biggest gainer by far in the S&P 500 heading into trading on Tuesday. Up more than 6%, the stock rallied from its lowest close since the March 2009 lows.
Closing in oversold territory above the 200-day for a third day in a row were shares of ^CMG^ on Monday. The stock has pulled back for five consecutive sessions, pulled back by more than 2% ahead of Tuesday’s session.
Rallying to its highest level since the fall of 2010 were shares of ^NEM^. The stock gained by more than 4% and is set to open in overbought territory on Tuesday.
Remember you can get 7 Stocks You Need to Know delivered for free every evening after the market closes. Click here to get your free subscription today.
David Penn is Editor in Chief of TradingMarkets.com