The Hot List: 3 Consumer Stocks for Short Term Traders
All three stocks in today’s report have more in common than their prominent place in the American (if not worldwide) consumer landscape. All three, Apple (AAPL), Ebay (EBAY), and Dillard’s (DDS) have pulled back in bull market territory, and are moving toward levels from which they have historically reversed and headed higher.
Of the three, the stock most likely to draw attention is Apple – and for good reason. In pulling back for three days in a row, Apple is among the more oversold stocks in the S&P 500 (focusing only on those stocks trading in bull market territory). And historically speaking, buyers have been attracted to stocks that are in otherwise healthy condition, but are experiencing a short-term sell-off – often from recent highs.
This is clearly the case in Apple, as traders and investors take profits in the wake of the stock’s advance to year-to-date highs earlier in the week.
These types of short term pullbacks also happen to stocks that are coming off rallies that, while not making major new highs, nevertheless create overbought conditions that will tempt many traders and investors who hold shares to sell. The current three-day pullback in Ebay, for example, comes after the stock rallied to new, 20-day highs.
The pullback in shares of Dillard’s Inc. (DDS) by comparison, is more mild than those in Apple and Ebay. Shares of DDS were essentially flat on Friday after closing lower for two days in a row. As such, DDS is still more in neutral territory and will require another day or two before sellers would likely be able to drive stock to historically “consider buying” levels.
All three stocks in today’s report were pulled from stock lists available through PowerRatings. To learn more, click here.
David Penn is Editor in Chief of TradingMarkets.com