Overbought and Oversold Stocks That Typically Reverse at Similar Levels

In our Daily Morning Lineup available to Bespoke Premium members, we provide a list of the most overbought and oversold stocks that typically reverse when reaching these price levels. To do this, we look at the price action of stocks in the S&P 1,500 over the last three years. Once we find the stocks that are the most overbought (oversold), we find the average performance over the next week and the percentage of the time the stock has been down (up) when it has been this overbought (oversold) in the past three years.

In the table below, we highlight the ten stocks in the S&P 1,500 that are overbought and typically go lower, along with the ten stocks that are oversold and typically go higher. As shown, ACS, DOW, and ADBE are the four stocks that are overbought with the weakest performance over the next week when getting this extended in the past.

On the flip side, when KO has been this oversold in the past, it has gone up 85.7% of the time over the next week for an average return of 1.06%. WFR has averaged a return of 4.22% over the next week when it's this oversold.

Comments

[Medici]

EP is just begining its run and is hardly overbought....Going into the summer Hurricane season, limited supply, and strong demand Natural gas has large upside. EP will benefit from this-

[WACG]

There is nothing significant about a 50 day moving average. In fact, a 50 day MA represents, merely, what was happening with the price TWENTY FIVE DAYS AGO. Further, standard deviations have meaning ONLY with data that is independent and "normally" distributed. Stock prices are irrefutably NOT independent. This sort of "analysis" only reinforces the dictum: "When your only tool is a hammer; all the world's a nail".

[John Egan]

Dear "WACG".... Huh????