Part 1 focused on sectors that were strong on Friday (#3 below). The 4 categories I’m tossing into my watch list this weekend are:
- Find sectors/stocks overbought
- Find sectors/stocks oversold
- Find sectors with strong momentum on Friday and look for continuation
- Find stocks technically setup for moves.
Now let’s take a look at stocks that are overbought (#1). Stocks in this category are often great short candidates if the market shows weakness. Keep in mind that many of these have moved on news and may not pull back, so look at them closely and understand their moves and I would watch for sell volume to come in before shorting. Volume is very important. Not only sell volume, but look for overall drying up volume. A lack of interest could turn them.
POT – we know the story here. The Potash Board of Directors rejected BHPs takeover bid earlier in the week. Don’t short too soon here. Still has plenty of buy interest.
CHTP – rose 13% to $4.05 after the biotech group said that it has launched a Phase II clinical trial of its drug Droxidopa in the treatment of chronic fatigue syndrome.
Some mild resistance at 4.4.
JKS – Chinese solar company on fire and way overbought. Doesn’t mean it will come back (lots of volume), but worth watching… as is BORN.
EBAY – That’s a lot of days up in a row and now testing SMA200.
INTU – Love the company, but the move was a little too high for my taste. Instead of shorting, I’m looking for a pullback before entering long.
CRM – Great earnings and a 16% jump in price on Friday. I would look for a near term entry around 105. May not get the opportunity – stock continiues to perform.
HNZ – Struggling to get through horizontal resistance from mid May. Volume is strong, however, so watch for confirmed lack or interest before you short or this could continue higher if $47 holds.
NAL – After huge gap and failed move above May 1 highs, this may be a candidate for a reversal. Volume starting to taper off a little. I might look for a short above 13 with stop at above 13.2.
ENDP – After a very impressive run that started back in May, it looks like ENDP might be running low on energy. RSI14 is way overbought and starting to turn.
MTXX – settling lawsuit.
FLO – Full Sto is starting to top out and the candles struggled over the last two days to stay above 26. Might be time to pull back some before attempting the next leg.
ASYS – Volume is definitely keeping this one going. RSI14 at 85. Watch for some of this volume to ease up a little and then you might see a quick move down to the 12.50 range.
