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Some investors view the put/call ratio as a contrarian indicator – when it reaches extreme levels, it may indicate that a turnaround is imminent.

We used this idea to search for potential contrarian opportunities by screening stocks under $5 that are rallying above their 20-day, 50-day, and 200-day moving averages. We screened these stocks for those that have seen significant increases in put/call ratio over the last ten trading days.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.

We also created a price-weighted index of the stocks mentioned below, and monitored the performance of the list relative to the S&P 500 index over the last month. To access a complete analysis of this list's recent performance, click here.


(Click to enlarge)

Do you think these stocks will soon turn around? Use this list as a starting-off point for your own analysis.

List sorted by increase in put/call ratio.

1. Rite Aid Corp. (NYSE:RAD): Drug Stores Industry. Market cap of $1.16B. Price at $1.36. The stock is currently trading at 6.65% above its 20-Day SMA, 15.50% above its 50-Day SMA, and 25.78% above its 200-Day SMA. Put/call ratio has increased 933.33% over the last ten trading days (from 0.06 to 0.62). This is a risky stock that is significantly more volatile than the overall market (beta = 2.35). The stock is a short squeeze candidate, with a short float at 9.95% (equivalent to 6.34 days of average volume). The stock has had a good month, gaining 18.18%.

2. Great Panther Silver Ltd (NYSEMKT:GPL): Silver Industry. Market cap of $519.10M. Price at $3.83. The stock is currently trading at 6.24% above its 20-Day SMA, 17.92% above its 50-Day SMA, and 33.77% above its 200-Day SMA. Put/call ratio has increased 346.15% over the last ten trading days (from 0.13 to 0.58). Exhibiting strong upside momentum--currently trading 6.24% above its SMA20, 17.92% above its SMA50, and 33.77% above its SMA200. The stock has had a good month, gaining 18.32%.

3. Curis Inc. (NASDAQ:CRIS): Biotechnology Industry. Market cap of $300.06M. Price at $3.94. The stock is currently trading at 6.23% above its 20-Day SMA, 9.85% above its 50-Day SMA, and 40.37% above its 200-Day SMA. Put/call ratio has increased 70.59% over the last ten trading days (from 0.34 to 0.58). The stock is a short squeeze candidate, with a short float at 7.47% (equivalent to 9.64 days of average volume). The stock has had a good month, gaining 18.37%.

4. BioSante Pharmaceuticals, Inc. (BPAX): Biotechnology Industry. Market cap of $334.15M. Price at $3.66. The stock is currently trading at 14.52% above its 20-Day SMA, 26.13% above its 50-Day SMA, and 75.12% above its 200-Day SMA. Put/call ratio has increased 68.75% over the last ten trading days (from 0.16 to 0.27). The stock is a short squeeze candidate, with a short float at 14.9% (equivalent to 5.07 days of average volume). The stock has had a good month, gaining 42.8%.

5. Immunomedics Inc. (NASDAQ:IMMU): Diagnostic Substances Industry. Market cap of $314.50M. Price at $4.19. The stock is currently trading at 3.84% above its 20-Day SMA, 4.80% above its 50-Day SMA, and 14.29% above its 200-Day SMA. Put/call ratio has increased 63.64% over the last ten trading days (from 0.11 to 0.18). The stock is a short squeeze candidate, with a short float at 13.96% (equivalent to 16.43 days of average volume). The stock has had a good month, gaining 11.2%.

*Options data sourced from Schaeffer’s, all other data sourced from Finviz.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: Contrarian Ideas: 5 Rallying Stocks Under $5 With Bearish Options Sentiment