One of the most overlooked discount racks during yesterday's big
stock sale was the one located in the Defense department, where
Triumph Group Inc.
) had pulled back to levels where traders have been more inclined
to be buyers than sellers.
Much of that buying is on display in Wednesday's trading, as
shares of both BA and TGI are up more than 1% after multi-day
that had taken both stocks deeply into short-term oversold
territory. Before Boeing's midweek bounce, the stock had closed
lower for five days in a row, the last two in technically oversold
territory, losing nearly 6%. Shares of Triumph Group had traded
lower in much the same fashion, selling off by more than seven and
a half percent ahead of the stock's Wednesday bounce of more than
Will the defense stocks continue higher? Among those stocks that
have pulled back sharply over the past few days, none have yet
rallied back into strength by, for example, closing above their
5-day moving averages or returning to technically overbought
levels. As such, traders and active investors interested in the
potential for continued upward movement in this sector may want to
look at some of those defense stocks that, while perhaps no longer
moving lower, have not yet attracted sizable numbers of buyers.
A potential example of this kind of stock might be
). Shares of GD closed lower by less than a quarter of a point on
Wednesday after pulling back for the past week (including two
oversold closes on Monday and Tuesday). The stock has a positive
edge in the short-term of more than three-quarters of a percent,
of 6 out of 10.
) have pulled back for three days in a row. But the bigger picture
reveals a stock that has been under even more severe selling
pressure. Since rallying to new, 6-month highs in late March,
shares of ESL have closed lower for 11 out of the past 12 days
(including the recent three-day sell-off).
The pullback in ESL has earned the stock a short-term,
of 1%. And opening Wednesday morning with neutral ratings of 6 out
of 10, shares of Esterline Technology were upgraded by one-point
intraday, bringing the stock within one point of our "consider
Although closing higher by more than three quarters of a
percent, shares of
) are still trading far nearer to short-term lows than short-term
highs, and could earn both significant ratings upgrades and
positive edges in the short-term on any additional selling in the
second half of the week.
Honeywell has a modest positive edge of a third of a percent
ahead of trading on Thursday, and neutral ratings of 6 out of
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is Editor in Chief of TradingMarkets.com