The number of new downward stock trends has increased substantially for the month of June, overtaking the number of new upward stock trends for the same time period. TrendStocker.com uses price metrics to track stocks trading on the NASDAQ, NYSE and AMEX stock exchanges and classify them as upward or downward trends, giving traders a unique perspective on market activity.
As new trends emerge, they appear to be overwhelmingly down with the number of new downward price trends increasing to 516 compared to just 78 new downward trends for the month prior. Subsequently, the number of new upward trends has decreased to 247 from 368 for the month prior, marking the first time that the number of new downward stock trends has outweighed the number of new upward stock trends since August of 2010. A look at the chart will illustrate that upward and downward stock trends briefly crossed paths back in August but with vastly different circumstances compared to this most recent position swap.
There are still some bright spots though with several existing trends such as ONEOK (NYSE:OKE), Ulta Salon (NASDAQ:ULTA), Discover Financial (NYSE:DFS) and Teradata (NYSE:TDC) to name a few, showing continued strength at the end of June. But betting long on individual trends while the overall trend has been showing a market downturn is an extremely risky play.
If you are holding on to a bullish perspective and have an appetite for risk, you could grab a couple of the trends mentioned above or possibly even sift through the strongest downward trends to find opportunities that appear to be heavily oversold.
A risk tolerant bear could take the opposite approach and search the strongest upward trends for short opportunities.
Disclosure: I have no positions in any stocks mentioned, but may initiate a short position in PCLN, P, LNKD over the next 72 hours.