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The following is a list of stocks that are oversold by the Relative Strength Indicator, RSI(14) < 40. Additionally, all of these names have recently seen an increase in the Put/Call ratio, which implies an increase of put open interest relative to call open interest.

While a increasing Put/Call ratio appears to represents bearish sentiment, some technical traders view the Put/Call ratio as a contrary indicator when it reaches extreme highs or lows.

Given the oversold conditions of these stocks and bearish options sentiment, which of these stocks do you find more likely to experience a rally?

Please note that the changes in the Put/Call ratios were recorded from March 17 to March 30.

click for expanded image

List sorted by change in the Put/Call ratio.

1. Pacific Sunwear of California Inc. (NASDAQ:PSUN): Apparel Stores Industry. Market cap of $228.64M. RSI(14) at 34.47. The Put/Call ratio increased by 1213.33%, from 0.15 to 1.97. The stock is a short squeeze candidate, with a short float at 17.44% (equivalent to 8.35 days of average volume). The stock has performed poorly over the last month, losing 23.28%.

2. Urban Outfitters Inc. (NASDAQ:URBN): Apparel Stores Industry. Market cap of $4.90B. RSI(14) at 35.01. The Put/Call ratio increased by 72.41%, from 0.87 to 1.5. The stock is currently stuck in a downtrend, trading -6.55% below its SMA20, -12.37% below its SMA50, and -11.22% below its SMA200. The stock has performed poorly over the last month, losing 22.09%.

3. FelCor Lodging Trust Inc. (NYSE:FCH): REIT. Market cap of $563.78M. RSI(14) at 34.91. The Put/Call ratio increased by 56.58%, from 0.76 to 1.19. It's been a rough couple of days for the stock, losing 11.55% over the last week.

4. Honda Motor Co., Ltd. (NYSE:HMC): Auto Manufacturer. Market cap of $67.71B. RSI(14) at 39.14. The Put/Call ratio increased by 21.0%, from 1 to 1.21. Relatively low correlation to the market (beta = 0.79), which may be appealing to risk averse investors. The stock has performed poorly over the last month, losing 14.44%.

5. Magna International, Inc. (NYSE:MGA): Auto Parts Industry. Market cap of $11.63B. RSI(14) at 36.67. The Put/Call ratio increased by 12.24%, from 0.98 to 1.1. Might be undervalued at current levels, with a PEG ratio at 0.93, and P/FCF ratio at 11.77. The stock has gained 55.4% over the last year.

6. Nomura Holdings Inc. (NYSE:NMR): Investment Brokerage Industry. Market cap of $19.15B. RSI(14) at 36.94. The Put/Call ratio increased by 9.09%, from 1.32 to 1.44. It's been a rough couple of days for the stock, losing 9.97% over the last week.

*RSI(14) data sourced from Finviz, options data sourced from Schaeffer’s Research.

Source: Contrarian Ideas: 6 Oversold Stocks With Increasing Put/Call Ratios