When are stocks vulnerable to correction
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)
2 comments:
Pradeep, you noted SDTH as one stock vulnerable to correction. The next day it fell 10% but yesterday it came back 14%.
I am wondering if a stock such as this having gone up so fast so soon is a risky play now? Would you be buying it now given that it came back very strong after the 10% drop, or is this stock potentially one that can still correct 25% or more in short order?
Appreciate your thoughts on such high, fast runners.
Mike
I always buy such stock after a 10 to 20 day corrections. Buying at such elevated levels is risky.
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