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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
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  • 5 Stocks for the Next 5 Days (MON, HAL, LRCX, FLIR, BAX)
    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).


    Jan 04 1:27 PM | Link | Comment!
  • 5 ETFs for the Next 5 Days (EWC, EWM, EWZ, XLP, GDX)
    As I noted in this morning in my 7 ETFs You Need to Know for Tuesday column at TradingMarkets, many of the exchange-traded funds that were overbought were commodities related or small cap equity related.

    An example of the former would be the PowerShares DB Agriculture Fund ETF (NYSEARCA:DBA).  And example of the latter would be the iShares Russell 2000 Index Fund ETF (NYSEARCA:IWM).  Both are continuing to move higher intraday on Tuesday and becoming increasingly overbought.

    Those ETF markets that were on the retreat heading into Tuesday were largely international equities ETFs like the iShares S&P Europe 350 Index Fund ETF (NYSEARCA:IEV) which was up by a modest amount halfway through trading on Tuesday after pulling back into oversold territory above the 200-day moving average.

    Even more impressive is the gain of more than 2% in the iShares FTSE/Xinhua China 25 ETF (NYSEARCA:FXI). The fund had become extremely oversold, closing in oversold territory above the 200-day for four consecutive trading days, before Tuesday's big bounce higher.

    Looking forward, here are some of the ETFs that high probability traders will be keeping an eye on over the next few days.

    Two country funds that are in oversold territory as of intraday Tuesday are the iShares MSCI Canada Index Fund ETF (NYSEARCA:EWC) and the iShares MSCI Malaysia Index Fund ETF (NYSEARCA:EWM).  EWC is on pace to close lower for six consecutive trading days above the 200-day.  EWM is looking likely to close lower for five.

    Down two days in a row heading into midweek was the iShares MSCI Brazil Index Fund ETF (NYSEARCA:EWZ).  EWZ was last oversold two weeks ago, when a four-day pullback led to a three-day rally.

    While most of the ETFs in oversold territory above the 200-day are country funds, the Consumer Staples Select Sector SPDRS ETF (NYSEARCA:XLP) has also been pulling back in recent days - albeit mildly.  The profit-taking in the ETF comes after a strong intermediate run over the course of the first half of December.

    Lastly, traders interested in the gold market may want to keep an eye on the Market Vectors Gold Miners ETF (NYSEARCA:GDX).  The fund dipped into oversold territory intraday on Thursday, despite the strength in the ETF's bullion-based counterpart, the SPDR Gold Trust ETF (NYSEARCA:GLD).

    Read Larry Connors latest column at TradingMarkets: Managing Your Money in Rising Markets with The Machine.

    An excerpt: These four rules combined have consistently shown historically above average edges since 1989. The Machine displays data starting from 2001, but we have internal studies going back over two decades showing the same behavior. During this period of time there have been wars, multiple presidents, an internet boom/bust/boom, a major credit expansion followed by a major credit crisis, along with dozens of other major political and economic events. Yet these strategies have consistently performed year after year, better than any other trading philosophy that has been published.
    Dec 21 2:06 PM | Link | Comment!
  • 5 Stocks for the Next 5 Days (BIDU, NG, AEM, CNS, GMCR)
    Among the stocks that closed in oversold territory on Wednesday, a number of those stocks have continued to follow-through to the downside.  This potentially increases the opportunities high probability short term traders will have to pick up oversold shares at even lower levels.

    Baidu.com (NASDAQ:BIDU) closed in oversold territory on Wednesday and looks likely to close lower for a third day in a row on Thursday.  A down close on Thursday would also mark the stock's fourth down close out of the past five trading days.

    For traders interested in gold stocks, shares of the very oversold Novagold Resources (NYSEMKT:NG) may be worth a look.  The stock had closed lower for seven days in a row heading into Thursday's trading and is looking likely to close lower again today.

    Down more than 4% in trading late on Thursday, Agnico-Eagle Mines (NYSE:AEM) is another potential option for traders looking to pick up gold mining stocks on weakness.  AEM had closed lower for seven days in a row going into Thursday's trading.

    Headed for a seventh consecutive lower close on Thursday are shares of Cohen & Steers (NYSE:CNS).  A lower close on Thursday would mark the stock's second in extremely oversold territory above the 200-day moving average.

    Lastly, headed for a fifth consecutive lower close above the 200-day are shares of Green Mountain Coffee Roasters (NASDAQ:GMCR).  The stock gapped down last Friday and has traded in oversold territory all week.

    Let Larry Connors show you how to build a professional, balanced high performing portfolio of stocks and ETFs.  Click here to learn more.
    Dec 16 12:24 PM | Link | Comment!
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