TradingMarkets Monday Stock Movers: FLIR, CRK, GDP, GG, ZOLL
Stocks are off to a slow start on Monday, as the markets continue to digest the aggressive selling from late last week.
On balance, stocks right now seem to be a bit more under the influence of the market’s bullishness from mid-month to the middle of last week than they are by the sharp decline of last Thursday.
FLIR Systems Inc.
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PowerRating) Short Term PowerRating 9. RSI(2): 3.60
As such there are actually a larger number of stocks in our overbought listing of stocks that are under the 200-day moving average and up 10% or more over the past five days than there are in our oversold listing of stocks that are above the 200-day moving average and down 10% or more over the past five days.
This means that stocks, in general, are more vulnerable to further pullbacks in the near term than they are to sudden rallies or advances.
Comstock Resources Inc.
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PowerRating) Short Term PowerRating 9. RSI(2): 14.66
What does this mean for stock traders? While opportunities remain for traders looking to take advantage of overbought stocks, the markets are not nearly as overbought as they were a few days ago. This means that it might make more sense for traders to wait for stocks to pull back further from current levels – allowing overbought stocks to become less so and for oversold stocks to continue to work their way lower.
Goodrich Petroleum Corporation
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PowerRating) Short Term PowerRating 9. RSI(2): 13.43
This is especially the case with some of the stocks in today’s report, stocks with double digit 2-period RSIs. Generally speaking, stocks with 2-period RSIs tend not to be among the most attractive candidates for stock traders looking to buy on weakness. In these instances, traders have two options to consider if they find a stock that otherwise meets their criteria for a buy.
The first option is to simply put the stock on a watch list and wait for the stock to move lower, likely bringing its 2-period RSI lower in the process. Of course, if the stock does not move lower, then traders should move on to other opportunities.
GoldCorp Inc.
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GG |
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PowerRating) Short Term PowerRating 8. RSI(2): 2.92
The other option is to try and take greater advantage of intraday weakness by going ahead and placing a limit order to buy the stock. But rather than putting such a limit order close to the stock’s most recent close, a superior strategy may be to place that limit order several percentage points below the previous close – as many as 6-8%. In this way, stock traders will be able enter the stock at not only a lower price, but potentially at a level that could represent an intraday extreme from which prices may rebound sharply.
Zoll Medical Corporation
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PowerRating) Short Term PowerRating 8. RSI(2): 3.35
Recall that our research, based on millions of simulated short term stock trades between 1995 and 2007, indicates that stocks with Short Term PowerRatings of 8 have outperformed the average stock by a margin of more than 8 to 1 after five days. Stocks with Short Term PowerRatings of 9 fared even better, besting the average stock by a margin of more than 13 to 1 after the same time period.
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David Penn is Senior Editor at TradingMarkets.com.