When are stocks vulnerable to correction

When are stocks vulnerable to correction

December 27, 2007

Yesterday I said solar energy sector and fertiliser sector stocks are vulnerable to correction at these level. Similarly I had warned about shipping sector before it topped. One of the easiest way to figure out which stock is vulnerable to correction is to look at "Price vs 200 Moving Average" . When the stock is up 100% or more from 200 moving average (which on Telechart sort means value of 200 plus) , it is vulnerable to correction.

IBD studis of top performing stocks show that they top at around 110% from the 200 day MA. From time to time IBD talks about this sell rule.

If you sort the All Stocks list by "Price vs 200 Moving Average" , you will notice most of the stocks with 190 plus readings are solar and fertiliser stocks.

Stocks up 100% plus from 200 day MA

CSIQ,Canadian Solar Inc (Google  Yahoo  Earnings  Chart) 
EMKR,Emcore Corporation (Google  Yahoo  Earnings  Chart) 
FSIN,Fushi Intl Inc (Google  Yahoo  Earnings  Chart) 
FSLR,First Solar Inc (Google  Yahoo  Earnings  Chart) 
JASO,Ja Solar Hldgs Co Ads (Google  Yahoo  Earnings  Chart) 
LUNA,Luna Innovations Inc (Google  Yahoo  Earnings  Chart) 
MOS,Mosaic Company (Google  Yahoo  Earnings  Chart) 
MTL,Mechel Steel Group OAO ADS (Google  Yahoo  Earnings  Chart) 
QSC,Questcor Pharmaceuticals (Google  Yahoo  Earnings  Chart) 
RICK,Rick's Caberet Intl (Google  Yahoo  Earnings  Chart) 
RIGL,Rigel Pharmaceuticals Inc (Google  Yahoo  Earnings  Chart) 
SOLF,Solarfun Power Holdings Co Ltd (Google  Yahoo  Earnings  Chart) 
SPIR,Spire Corp (Google  Yahoo  Earnings  Chart) 
STP,Suntech Power Holdings Co Ltd (Google  Yahoo  Earnings  Chart) 
ZIXI,Zix Corporation (Google  Yahoo  Earnings  Chart) 

Another thing which signals likelihood of correction in a stock is climax move. Moves of 50% plus in a month on a stock which already has been rallying, typically lead to correction in the stock in next small time frame.

Stocks up 50% plus in a month

ARTW,Art's-Way Manufacturing (Google  Yahoo  Earnings  Chart) 
ASTI,Ascent Solar Technologies Inc (Google  Yahoo  Earnings  Chart) 
ASTIZ,Ascent Solar Technologies` Inc. (Google  Yahoo  Earnings  Chart) 
AVR,Aventine Renewable Energy Holdings Inc (Google  Yahoo  Earnings  Chart) 
BMTI,BioMimetic Therapeutics Inc (Google  Yahoo  Earnings  Chart) 
BRKR,Bruker Biosciences Corp (Google  Yahoo  Earnings  Chart) 
CHNR,ChinaNatural Resources (Google  Yahoo  Earnings  Chart) 
CSIQ,Canadian Solar Inc (Google  Yahoo  Earnings  Chart) 
CSUN,China Sunergy Co Ltd (Google  Yahoo  Earnings  Chart) 
CTDC,China Technology Development Group Corp (Google  Yahoo  Earnings  Chart) 
ECHO,Electronic Clearing House (Google  Yahoo  Earnings  Chart) 
EMKR,Emcore Corporation (Google  Yahoo  Earnings  Chart) 
ESLR,Evergreen Solar Inc (Google  Yahoo  Earnings  Chart) 
FSIN,Fushi Intl Inc (Google  Yahoo  Earnings  Chart) 
HES,Hess Corp (Google  Yahoo  Earnings  Chart) 
HOKU,Hoku Scientific Inc (Google  Yahoo  Earnings  Chart) 
HRBN,Harbin Electric Inc. (Google  Yahoo  Earnings  Chart) 
IRW,Ibt Bancorp Inc (Google  Yahoo  Earnings  Chart) 
JASO,Ja Solar Hldgs Co Ads (Google  Yahoo  Earnings  Chart) 
JRCC,James River Coal Company (Google  Yahoo  Earnings  Chart) 
LDK,LDK Solar Co Ltd (Google  Yahoo  Earnings  Chart) 
LEAP,Leap Wireless International Inc (Google  Yahoo  Earnings  Chart) 
MELI,Mercadolibre Inc. (Google  Yahoo  Earnings  Chart) 
NEXT,Nextest Systems Inc (Google  Yahoo  Earnings  Chart) 
PFB,Pff Bancorp Inc (Google  Yahoo  Earnings  Chart) 
PTT,Vcg Holding Copr (Google  Yahoo  Earnings  Chart) 
RICK,Rick's Caberet Intl (Google  Yahoo  Earnings  Chart) 
RIGL,Rigel Pharmaceuticals Inc (Google  Yahoo  Earnings  Chart) 
RZ,Raser Technologies Inc (Google  Yahoo  Earnings  Chart) 
SDTH,Shengdatech Inc (Google  Yahoo  Earnings  Chart) 
SOLF,Solarfun Power Holdings Co Ltd (Google  Yahoo  Earnings  Chart) 
SPIR,Spire Corp (Google  Yahoo  Earnings  Chart) 
SVNT,Savient Pharmaceuticals Inc (Google  Yahoo  Earnings  Chart) 
TSL,Trina Solar Ltd. (Google  Yahoo  Earnings  Chart) 
ULBI,Ultralife Batteries Inc (Google  Yahoo  Earnings  Chart) 
USBE,US Bioenergy Corp (Google  Yahoo  Earnings  Chart) 
VSE,VeraSun Energy Corp (Google  Yahoo  Earnings  Chart) 
YGE,Yingli Green Energy Hlds Co (Google  Yahoo  Earnings  Chart)