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David Penn
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David Penn is Editor in Chief of TradingMarkets.com.
My company:
TradingMarkets.com
My book:
Larry Connors: Short Term Trading Strategies That Work
  • 5 Stocks for the Next 5 Days (MON, HAL, LRCX, FLIR, BAX) 0 comments
    Jan 4, 2011 1:27 PM | about stocks: MON, HAL, FLIR, LRCX, BAX, AMZN, AAPL
    One of the more interesting things to watch over the last quarter of 2010 was how blue chip stocks, the stocks of the S&P 100 and Nasdaq 100, tended to rally in the short-term after three-day pullbacks.

    I noted this briefly in my column for TradingMarkets 7 Stocks You Need to Know, and highlighted stocks like Amazon.com (NASDAQ:AMZN) and Apple (NASDAQ:AAPL) as examples of the kind of stock that was pulling back in a way that might be worth watching for traders who like to buy weakness and sell strength rather than chase breakouts.

    Today's 5 Stocks for the Next 5 Days column will focus on other stocks from the S&P 100 and Nasdaq 100 that high probability traders will likely have their eyes on over the next few days.  Should these stocks continue to pullback for multiple consecutive trading days, then traders should not be surprised to see them respond as oversold stocks have historically responded - with a short term rally in price.

    Shares of Monsanto (NYSE:MON) have been trading above their 200-day moving average since early November.  And having pulled back twice since then only to rally to new highs, the current pullback in the stock appears noteworthy as a potential high probability opportunity on additional weakness.

    Down more than 2% on Tuesday and looking likely to close lower for a third day in a row are shares of Halliburton (NYSE:HAL).    The stock has been in a trading range since the beginning of December and the current pullback has taken the stock to the lowermost edge of that range.

    If the selling in Baxter International (NYSE:BAX) continues, then this medical device company will have closed lower for five consecutive trading days.  In fact, BAX will have closed for two days in a row in oversold territory above the 200-day moving average.

    Among Nasdaq 100 stocks, Flir Systems (NASDAQ:FLIR) will have closed lower for three days in a row as of the end of trading on Tuesday.  The stock has been trading above its 200-day moving average since early November.

    I had my eyes on shares of Urban Outfitters (NASDAQ:URBN) late last night.  But that stock has rallied on Tuesday rather than closing lower for a third day in a row.  In URBN's place, let's add Lam Research Corporation (NASDAQ:LRCX), which is down three days straight (assuming Tuesday's selling holds).


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