I love The PPT.
The only complaint that I have with The PPT is sometimes I feel overwhelmed by the amount of information that I am able to glean from the tool. Every day I’m tweaking old screens, building new screens…there are essentially an infinite number of ways to use this thing…sometimes I discover new nuggets…sometimes I end running around in a circle.
Nevertheless, there are certain tried-and-true screens that I return to to find trades that best fit my style. One such screen (actually it’s two screens) I use is to find stocks that are “flagging” OVERSOLD on the 3, 6 and 12 month PPT algorithms. I have discussed how I use these screens at length in these posts (I and II)…instead of rehashing old territory, you can refer back to those to delve into the nuts and bolts of what I’m doing here.
After running my screens this AM, there were an above-average number of ‘records’.
(737…which could be suggesting that many individual stocks are becoming oversold even though the market is holding up relatively well. To digress for a moment…honestly, since the November 16th bottom, this market has been extremely vexing to me. I NEVER would have thought we would blast higher in the “V”-shape manner in which we did. I got burned trying to short that move, even though retesting the lows made sense to me at the time…hey, what can you do? You learn from it and move on.)
From that group, the following stocks have caught my eye as (historically) high probability OVERSOLD plays that have well defined risk “barriers”:
$LL
There is a lot of ‘congestion’ in the area defined above that could provide decent support. I use risk to determine my position sizing…in this case I would use the 50.85 as my “worst case scenario loss”.
$SHW
After breaking out on 11/19, $SHW has fallen on hard times. FWIW, I LOVE buying pullbacks from breakouts…it’s probably my favorite pattern. A stock that had the momentum, then stalled and has retreated back to an area of prior support? Sign me up. My risk is into the mid-147’s (147.43 to be exact).
$KSS
$KSS could be ripe for an oversold bounce now that it has (quite literally) crashed back into prior support. I hate trying to play these, but there is a well defined area of support down to about 42.70, thus (barring any pre/post market carnage) you know your risk and can act accordingly.
Lastly, $HFC
Here we have a stock that is coiling right at all-time highs and is also oversold…sign me up for that as well. 44 is about as far as I would let this one get away from me to the downside. There is a lot of clean air above so this one could potentially pop in the coming days.
Chew on those for a while.
My best to you all.
-EM
