5 Stocks for the Next 5 Days: Edges in Oversold Utilities


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In my last 5 Stocks for the Next 5 Days column, we looked at a number of stocks that had become overbought below the 200-day moving average. Historically speaking, these are stocks that have tended to underperform in the near term. As such, they are best avoided or, potentially, sold short.

All five of the stocks from the last column began selling off the day after the column was posted. Shares of Titanium Metals Corp New ( TIE ) fell for four days, losing more than 10%. Children's Place Rtl Str ( PLCE ) and Digital River Inc ( DRIV ) dropped for three days in a row, falling by more than 7% and 5%, respectively.   VeriFone Holdings Inc ( PAY ) and Lockheed Martin Corp ( LMT ) also gave up ground in two-day retreats.

This is another example of why the research suggests that traders should be wary of stocks that close higher for day after day below the 200-day moving average. When profit-taking and renewed selling strike these stocks, the reactions can be swift.

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Here are 5 Stocks for the Next 5 Days

Many of the stocks that are pulling back to new lows or trading near oversold territory above the 200-day moving average are utilities stocks. This includes stocks like Consolidated Edison Inc ( ED ) and Southern Company The ( SO ) . Shares of ED have closed lower for four consecutive trading days, dropping by more than 2% and ending the Wednesday session at new, 7-day closing lows.

SO has also closed lower for four trading days in a row as it retreats to new, 7-day closing lows above the 200-day. Shares of the stock pulled back by a little over 1% ahead of trading on Thursday.

Closing in oversold territory above the 200-day moving average, shares of Costco Wholesale Corp ( COST ) pulled back by well over 1% ahead of trading on Thursday. Wednesday's pullback takes COST to new, 7-day closing lows, as well.

Shares of Mcdonalds Corp ( MCD ) pulled back for the third session out of the past four trading days on Wednesday. The stock is still technically in neutral territory, but could find itself in oversold territory above the 200-day moving average if sellers remain on the offensive over the balance of the week.

Up two days in a row, shares of Ford Motor Co ( F ) are closing in overbought territory below the 200-day moving average ahead of trading on Thursday. F gained well over 4% in Wednesday's session and has been trading below its 200-day moving average since late May.

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David Penn is Editor in Chief of TradingMarkets.com

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Stocks
Referenced Stocks: COST , F , LMT , MCD , PAY

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