What Goes Up… 4 Overbought Stocks for Traders
When a market moves strongly higher, there are two kinds of stocks traders want to be interested in. The strong stocks that have pulled back, and the weak stocks that may have gone too far too fast.
Truth told, by the time the broader market is moving up, it is often too late to take advantage of most of the strong stocks that were pulling back. The TradingMarkets approach to trading calls for not just buying weakness, but buying intraday weakness. This means, in short, that when we spot an opportunity to buy an oversold stock, we actually want to see that stock move down even further before buying it
The same is true with regard to selling stocks short. When we see a stock that has all the characteristics of being overbought: extremely high 2-period RSI values, multiple consecutive highs, large gains in a short period of time—