Today although i might have a video out later , I wanted to have a discussion on overbought vs oversold stocks. Post the stocks that you think are overbought or oversold, tell us why, (i.e. MACD, RSI, Fundamentals? etc..) and what you think the trade should be, at what levels? when would you get in and out?
Today, I traded ICE to the short side, as it hit a double top area at around 121.50. The RSI was very overbought as we hit the double top, and even though the MACD did not have a bearish divergence, Also as Dan Messer points out: It is $20 past the average 12 month target of 12 brokerage firms. It is 30 times 2009 eps, growing at 12x. The run up on ICE was more of a full stock market rally sorta thing. I shorted it today but took profits at the end of the day. I still think it has some ways to go to around 107 or so.
I also think Gold should be topping out around these areas.. though we are never really sure, there is a classic head and shoulders behavior on the GLD, The fast MACD is finally crossing the slow to the downside (on the daily), and there seems to be a topping out on the MACD and the RSI on the daily. Volume to the upside today was incredibly low, and we sold off as soon as the market opened. I believe a fall to the $91 level is possible.
Now it’s your turn, what do you see being extremely overbought or oversold?
BAC
Washington D.C. (June 8, 2009) — House Oversight and Government Reform Committee Chairman Edolphus Towns (D-NY) and Ranking Member Darrell Issa (R-CA) today served a subpoena on the Federal Reserve (the Fed) to compel it to turn over documents related to Bank of America’s acquisition of Merrill Lynch.
http://rawstory.com/blog/2009/06/house-committee-subpeonas-federal-reserve/
WFC
In the wake of the subprime mortgage crisis, the unsavory and sometimes illegal business practices of the mortgage lenders at the vanguard of the subprime trend have slowly been coming to light. But new claims in a lawsuit filed against Wells Fargo by the city of Baltimore — and reported in the last week by the Baltimore Sun and New York Times — are pretty shocking nonetheless.
http://tpmmuckraker.talkingpointsmemo.com/2009/06/lawsuit_wells_fargo_targeted_blacks_for_subp.php?ref=fpa
Hey Idan,
I’m a long time shareholder of ICE..i own over 500 shares and have bought in a variety of ranges mostly in the 35-90 range. Anyway, I agree with you valuation on ICE, but you need remember this stock gets a premium multiple based on it being an eventual takeover target. I think the NDAQ index is extremely over bought just take a look at AMZN, RIMM, AAPL, BIDU valuations not to mention the valuations on all the semis. I understand RIMM is reporting earnings next week, but I’m courageously going to buy a boat load of QID tomorrow. This is definitely not a safe trade but the risk reward I think are in my favor based on how the NDAQ under-reacted to TXN beat last night….Give me your thoughts….TIA
These take-over rumors could end up working out in ICE’s favor, but i think they are also sort of priced into the stock by now, as ICE got such a nice rally off of its lows… buying it at 35–90 was brilliant, but now its time to take some off… the sell off today was not one that states that ICE will fall to new lows, it might even be more of a bull flag… but if it breaks 112, we’re moving lower.. my guess is that 112 will be tested first and if the bounce is weak then we’ll move towards the 107 level. But you never know, my guess is that with incredibly low trading volumes these days ICE must be getting hurt a little here.
Hiya Steve. Possibly the Naz underreacted to TXN’s bullish e/r last night , but the entire semiconductor sector definitely reacted very well today and likely was what kept the naz in green all day. INTC AMD BRCM ADI NVDA ADI XLNX TXN etc.
see $DJUSSC. +4.36%. Looks like it almost broke out of a cup with high handle base on the daily chart today.
2X Ultra semiconductors (USD) did very well today also. (not to be confused with $USD!!, LOL)
THIS GUY IS NO OSCAR: http://www.youtube.com/watch?v=BKiJv3IEB2c
i watch alot of people’s ideas and nobody gets things right more often. the key
here is that he anticipates a move and has ZERO BIAS on the move . he just
watches and waits for the buy or sell signal and takes a position and gets out
for a quick profit. the ultimate professional trader who cares nothing about direction
and only cares about being on the right side of it.
here is my LATEST OVERBOUGHT PICK: MVSN
http://stockcharts.com/charts/gallery.html?mvsn
the WEEKLY CHART on this one is HILARIOUS.
got me some $22.50 PUTS on first sign of weakness after watching this one for days and days. what we have here is the classic emotionally charged run while the MACD keeps making lower highs. the KEY TELL is the sudden drop in volume as some of the buyers dry up. now the last entrants may be saying to themselves “what have i done!” and as the stock declines they sell on emotion just as they chased an emotional buy? this is how you end up OVERBOUGHT.
at the BEGINNING OF MAY the RSI hit a whopping 75 after tapering off. at the BEGINNING OF JUNE the RSI double topped at 70 failing to achieve higher was the first thing that makes a bear brain go ding ding ding.
STEP 1 ,, break the last swing high at $22 … put my puts in the money. knocked on the door once. then we see what the buyers are made of. if the stock has strong followers it will be defended. if the last buyers are “quick buck artists” they will bail out pretty fast.
STEP 2 ,, cash in — based on the earnings this one should be under $18 imo. of course , in this market that usually doesn’t mean much.
Idan-
Please take this for what it is: an old trader who is trying to be helpful.
In 1992, a trader friend of mine (at the time, he had been in the business for 20 years) told me a simple stock theory: When a stock breaks 100 – whether the 1st time or the 5th time – it runs up to 125 in the first 8 trading days but usually no later than 30 trading days. (If it stays there, well, – that is another discussion.
Although I never dilligently back-tested this theory, I abide by it. I was a liitle frightened ( for you) when you posted your short. My humble advice: let it take out 125 – even intraday – and then think about shorting -or not. Although very helpful, the charts don’t tell stock histroy like experience does – and I learned (the hard way!) to not get in the way of history.
My trader friend and I still talk every single day – and for his 37 years of experience – well, I’ll say this: experience and charts equals an even greater probability of success.
I find the both of you great sources of information!
Thanks for the work you do…
PCLN —– looks like it is marching to $120 ………. for no good reason other than people chasing price. the volume is decent too. amazing. took some puts at $116 and i guess im hosed over?… for a bit.. interesting bit of info
EXM.
what are you doing with this stock? came from $55… you going long on this double bottom?
MELI Mercado Libre( Latin American E-BAY copy, in fact EBAY owns a good hunk of it) looks like it has run into trouble lately what with the series of black candles and dojis recently. Another break of the 20 and 50MA’s will likely send it for another test of the 200 as the 20 crosses the 50. On close watch. This is one stock I definitely want to own again, but not at this price…
That stock made me a small fortune on the short side….I decided to short it a few weeks after Jim Cramer recommended it. Thanks for bringing up some good money making memories…I will take a look at it tonight. TIA
Yes I remember Cramers pump on it very well also. I was already long on it at the time, and the stock was not well known yet. It was one of his best working pumps, and I really cleaned up on the long side partially thanks to him. Never have shorted it, yet…….
Have to be some careful on the short side though, it is an EBAY baby.
2 plays from me; stochastics and macd both heading north with stochastics looking to cross again above 80. BRCM is more of a green play for me than anything else. With both these stocks a confirmation with a back test of today’s highs and break above will be my entry point.
BRCM entry will be 27.50 to 27.60 with a target of 29.95 to 30.00
ANDE entry will be on any pull back with a target of 33.00 as this will be a 61.8% retrace and likely target. A break above 31.40 will confirm for me.
Another stock I am monitoring closely and trying to find news on is SQNM Huge volume today and up 58% to 5.30 I know its a penny stock but first target for this is 7.20ish then double digits. Relatively new trader so if anybody knows something about this stock I would appreciate the information
I know they have something going on with Downs Syndrome and are the plaintiff in a suit, beyond that I haven’t a clue. Call volume and open interest far outweigh the puts front month. 7.50 seems to be the market makers price.
API reported after the close-oil inventories fell much more than expected – 6M barrels vs 400K expected.
A confirmation in morning by DOE inventory data, and already passing the psychological barrier of $70 tonight, could make oil rock even higher.
Also tommorrow 10 yr treasury auction-could drive rates higher-10 yr yield of 4% or more potentially negaitive for stocks. Also at 2 P.M. Fed’s beige book on the economy-one to watch, treasury monthly budget, and Senate Banking Committee’s hearing on auto industry bailout.
Thursday- jobless claims-if worse than expected, could move yields lower, and could then even be positive for stocks? 30 yr treasury auction in afternoon.
I think we should definitely look for natural gas plays for longs
http://www.cnbc.com/id/31174107
Also Zee wrote some compelling info about UNG last night in the other thread
All the averages are flying this morning. Basically I’m going to have to bend over and take it for buying some SDS before the close yesterday. Oil is screaming past $70 on BS fundamentals. The only thing I can bank on to break this rally today is the Crude oil inventory report and the Long Term Bond Auction needs to go poorly.
I watch a few dozen stocks, but mostly play ETF 3x’s.
That said, I use McGraw-Hill as one market barometer. Its price action tells me we have a day or 2 to go on the upside.
BUT ….. ConAgra is overbought. Or nearly so. It is one of the LAST stocks to move before the overall market changes direction. And its move to high $19′s is totally to the top of its range since September. Almost a nice cup and handles, but I really can’t believe in them for CAG.
CAT is also on my short radar … but I’d like a pop to almost $40 first.
CAT is a great short. Their financial arm is going to rip them up when their credit portfolio starts to deteriorate again.