Short-Covering Rally Bumps Oversold Stocks

Rookie traders can’t spot it, but it’s right in front of you…

Short-covering [related video] is a fast, momentum move higher, after a prolonged down trend. Short-sellers have identified a spot they NEED to get out, plus new buyers of the stock now want to get in, so they buy.

You now have two forces bidding stocks up.

New buying during a down trend occurs as prices decline. This is known as accumulation.

Knowing the difference is important, because it tells a smart trader whether to sell-short the next pause after the rally. Or to be a buyer.

Scroll down and look at the chart of the SPY on the ten minute chart and you see what I mean.

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Pete’s  Day Trading Notes:

  • Plenty of oversold stocks. The SPY is not, has further room to the downside.
  • I still like FB and AMZN long, of those stocks beaten down the last week.
  • Trading the open is a must for day traders right now. The five minute breakout has produced some nice winners this month.

Stock Market Today: Map of the S&P 500

(click the map for a full view)

Short-Covering Rally Pauses Bearish Trading Day

–> Top 25 Proprietary Trading Secrets

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Short-Covering Rally Bumps Oversold Stocks

Silver Price: Traders Buy Silver As Stock Markets Falter

With the USD in general retreat and risk-off dominating the stock markets, the demand for haven-assets such as silver and gold has increased.

GoPro Trading Higher; Barron’s Mentioned Sony, Under Armour Could Be Interested In Acquisition

Shares of GoPro Inc GPRO were trading higher by more than 4.4 percent early Monday. An article on Barron’s (dated February 6) detailed several companies that may be interested in acquiring the action camera maker.

Despite the large decline in GoPro’s stock, Barron’s suggested that GoPro still has “some financial cushion to regain its footing” as the company holds no debt and boasts $474 million in cash on the balance sheet and that its enterprise value is just under $1 billion.

Read more: http://www.benzinga.com/news/16/02/6225822/gopro-trading-higher-barrons-mentioned-sony-under-armour-could-be-interested-in-a#ixzz3zfeS4Xi4

Don’t even try picking a bottom here: Trader

“Don’t be a hero,” one strategist warns.

Chart Reading the SPY ETF

SPY hammer candlestick created by short-covering gives no clues. Price action still pointing down with volume. A good chance we see sideways price action in the indices today.

(click the chart for a full view)

Short-Covering Rally Pauses Bearish Trading Day

Technical Analysis | Charts of Interest

oversold and capitulation volume at support, looking for a spot to bid for a swing trade.

(click the chart for a full view)

Short-Covering Rally Pauses Bearish Trading Day

Stocks to Trade 2-9-16

Short-Term Trading Momentum:

Positive the last 20 and 5 trading days | closed 2% higher from the open: JWN, TSN, CVX, UPS, AR, PG, DO, XOM, UNP, COG, ETN, SE

Negative last 20 and 5 trading days | closed 2% lower from the open: splk, now, nxpi, tsla, wdc, aer, crm, mbly, epd, lnc, cf, ua, endp, nwl, atvi, adsk, adbe, vrtx, v, c, akam, car, aet, mpc, tmus, rcl, gs, swks, tso, met, fis, hog, vlo, hcn, hd, cof, cvs, tap, low, pru, dg, 

Quarterly Order Flow:

Bullish Stocks to Trade: TSN, JNJ, XOM, CAM, FAST, NEE, MMM, PM, WMT, RTN, KORS

Bearish Stocks to Trade: lnkd, now, splk, mbly, mpc, aer, lng, tso, tsla, vrtx, wdc, nflx, crm, lnc, uri, vlo, adsk, atvi, wfc, c, expe, amzn, mck, cf, axp, luv, kss, adbe, dvn, nwl, akam, ual, ma, aal, met, teva, swks, aet, pru, low, gild, len, ctxs, tel, hd, ba, wba, endp, ea, gs, hog, v, nke, nbl, pnc, dis, ua, amgn, utx, ctsh, cvs, acn,

20 Day Breakdown: splk, lvlt, tsla, wdc, aer, ctsh, crm, ms, lnc, nwl, atvi, lbtya, lng, adbe, v, c, sti, rcl, gs, nvda, hbi, tso, vlo, acn, hd, dhi, nke, cvs, tap, ftnt, low, teva, wfc, psx, ma, kr, aig

20 Day Breakout: JWN, TSN, NEM, UPS, AR, PG, ED, XOM, COG, ETN, SE, WEC, MMC, RRC, CMCSA, ALL, CMI

2x Normal Volume: FB, V, CMCSA, SBUX, NKE, CRM, MPC, ATVI, TXN, HES, LNKD, ADBE, CTSH, CCL, TSN, TSLA, GS, UA, TOT, PSX, RCL, ACN, NOW, SPLK, GRUB, TAP, LVLT, FIS

Inside days: lnkd, abc, rtn, mat, urbn, xon, bhp, ppc

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Leave a Reply 2 comments

bob Reply

GREAT ANALYSIS-Pete–as usual, keep an eye for gold miners -they tend to move before the gold stocks – eg: GG-GOLD-NG-CEF-FNV–RGLD–last 2 being royalty co-s ..thnx-bob

    Pete Renzulli Reply

    thnx Bob,
    lets have a profitable day!

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