Major stock market indexes ended Monday higher, extending gains after Friday’s relatively large rally. Market breadth was positive with more than 70% of the stocks traded on both the New York Stock Exchange and NASDAQ closing higher on the day. Although most stocks have participated in the recent rally, some stocks remain oversold. This will almost always be true in any market environment.
Using the The TradingMarkets Screener we can quickly obtain a list of potential buy candidates. We can limit the list to large cap stocks by restricting the screen to stocks that are in the S&P 500 index. To find stocks that are in a long-term uptrend, we can require the stock to be above its 200-day moving average (MA). Then there are then a number of choices available to identify stocks experiencing a short-term pullback.
Although there are 336 S&P 500 stocks trading above their 200-day MA, none of those stocks have a ConnorsRSI reading below 20 indicating they are oversold on that indicator. The 2-period RSI indicates that five stocks are oversold.
Bollinger Bands® (%b) identifies three additional potential buy candidates.
There are additional indicators available at The TradingMarkets Screener traders can use to expand or narrow the list of trading candidates. The eight stocks identified above could be considered buys on additional weakness.
Now let’s look at the most overbought and oversold stocks (according to ConnorsRSI) heading into trading for August 12, 2014. ConnorsRSI is a proprietary and quantified momentum oscillator developed by Connors Research that indicates the level to which a security is overbought (high values) or oversold (low values).
GSIT (Gsi Technology) is the most oversold stock with a ConnorsRSI reading of 1.15.
EUM (ProShares Short MSCI Emerging Markets) is the most oversold non-leveraged ETF with a ConnorsRSI reading of 15.97.
EDZ (Direxion Daily Emrg Mkts Bear 3X Shares) is the most oversold leveraged ETF with a ConnorsRSI reading of 15.99.
KKD (Krispy Kreme Doughnuts) is the most overbought stock with a ConnorsRSI reading of 98.25.
PBW (PowerShares WilderHill Clean Energy ETF) is the most overbought ETF with a ConnorsRSI reading of 93.07.
TradingMarkets Lists provide users pre-populated lists of stocks and ETFs identifying symbols with overbought and oversold ConnorsRSI and Bollinger Bands® readings. The Screener Lists are powered by The TradingMarkets Screener.
All data is as of the end of day on 8/11/2014.