The Most Overbought Dow Stocks

From Forbes - Options
January 3, 2014 - 11:04am
The stock market started off the New Year on the downside for the first time since 2008. But still, the Spyder Trust (SPY) is just 1\% below the recent highs. The declining issues outweighed the advancing ones by over a two-to-one margin, which has dropped the McClellan oscillator to +58 on the close. The oscillator did form a slight negative divergence at Tuesday?s highs. The futures are higher before the opening, and it would take several consecutive down days to suggest that a deeper correction was underway. The important support for the S&P 500 (SPX) is in the 1,800-1,810 area. As I noted yesterday, in my technical market review, the bullish sentiment is quite high, with the number of bearish financial newsletter writers close to a 26-year low. It will take a more severe decline before these numbers start to turn around. With 83\% of the stocks in the Dow Industrial now above their 50-day MAs, the Dow is clearly in overbought territory, but below the recent high at 90\%. At the correction lows in August and September, less that 20\% were above their 50-day MAs. Those types of readings create a more favorable risk-buying opportunity. Therefore, when I ran my monthly starc band scan of the thirty Dow Industrial stocks on New Year?s day, I was not surprised to find quite a few stocks near their starc+ bands. When a stock or ETF is close to this band it is considered to be a high-risk buy, since 93\% of the price activity should stay within these bands. The SPDR Dow Industrials (DIA) closed last month 3.5\% below its monthly starc+ band. However, these overbought stocks are also typically market leaders and therefore should be attractive for new purchase once they either correct, or trade in a range where the risk can be better controlled.

Continue reading this article »



More Options News & Articles »

Options Description

Stock options give buyers the right to buy or sell stock at a given price on or before a given day. We discuss the best option strategies from the best options traders in the world.


Futures Exchange  Mondelez International Inc  MDLZ  Regeneron  Crown Castle International  ECL  GLW  Holdings Inc  Delphi Automotive  Express Scripts Holding  Mattel Inc  CAH  Teva Pharmaceutical Industries Ltd  TEVA  BSX  Striking Price  Technologies Inc  VXST  Resources Inc  AMTD  iShares  IJR  UnitedHealth Group Inc  AME  Dominion Resources Inc  JWN  GSK  Marsh  MMC  EOG  Host Hotels  Resorts Inc  HST  PX  Weeklys  AMZN  Unemployment Report  ATVI  MSCI Emerging Markets Index  Heat Seeker  Rockwell  RL  SPDR Dow Industrials  CBOE Futures Exchange  Visa Inc  CBOE  Ford Motor  Claims  LBTYA  Business Machines  Liberty Global Plc  UnitedHealth Group  CBOE Russell  SPDR Gold Shares ETF  SBAC  DISCA  Managers  BuyWrite Index  MRK  DTV  MannKind  MNKD  Sector SPDR  XLK  Nielsen Holdings NV  NLSN  TEL  CF Industries Holdings Inc  CF  Profit Alert  JCP  GNW  Market  Dow Transports  Look  Union  JPM  Oil  Gas  Senate  Baker  Ford  Disney  DIS  Lennar  Transports  Week Ahead  Atlas Pipeline Partners LP  Bloomberg  Chicago Board Options Exchange  Nasdaq-100 Volatility  Nonfarm Payrolls  Nonfarm  Italy  Kinder Morgan  Nonfarm Payroll  Payrolls  This Week  YieldBoost  Stock Options Channel 

Options Blogroll

1option   Beta.futuresmag   Cboe   Crowderoptions   Futuresmag   Landing.newsinc   Momentumoptionstrading   Online.barrons   Optionmonster   Optionpundit   Options Tiger   Schaeffersresearch   Whatstrading