May 25 Checkup on Most Overextended Stocks from 200d SMA

May 25, 2011: 2:04 PM CST

It’s time for another update on the “Stocks Most Over/Under-Extended from their 200 day SMA” list!

It’s surprising how much has NOT changed since the last update, but that is part of the benefit of this occasional scan.

The scan is designed to find the strongest and weakest stocks in terms of their distance – above or below – the 200 day simple moving average reference price.

Let’s start with those “Bullish” Stocks that are most Over-Extended from the 200d SMA:

Using FinViz.com’s Screener Tool, we see the Top Four stocks that show the highest distance (percentage) from their 200d SMA.

Cabot Oil & Gas (COG) makes another appearance at the #2 slot, after showing up on the April 3rd and 18th update.  COG remains strong, as it is within pennies today of a new recovery high not seen since 2008’s “collapse” in the price of oil.

Abercrombie and Fitch (extended 42%) also reappears on the list, as it has continued its rally after the resistance breakout impulse from April.

As has been the case in prior scans, the Basic Materials Sector – particularly oil – has shown a high number of stocks via this bullish scan.

As always, you can use these stocks that appear in the scan however your trading strategy works best – either looking for aggressive reversal candidates to play potential reversals in over-extended stocks… or bullishly to play strength in well-established uptrends (buying pullbacks and breakouts).

The opposite logic is true with stocks that are most overextended under their 200d SMA – “fade” traders can use these to look for potential reversals which “trend” traders can continue playing future breakdowns or retracements.

Here are the most Under-Extended S&P 500 Stocks:

Tellabs reappears as the #1 Stock Most Under-Extended from its 200d SMA again, which clues us in that the stock price has been under significant pressure and continues to press to new lows so far.

TLAB registered a fresh new 52-week low this morning, as it has been down-trending since peaking in May 2010.

Three new stocks joined the top (or bottom?) of the scan from last month:  AKAM, AIG, and LXK.

Another insight you glean from this scan is to which sectors are showing general strength or weakness, as evidenced by a concentration of stocks in these lists.

For example, Basic Materials have registered a good number of companies as bullishly overextended while the Technology Sector continues to register a number of stocks in the under-extended camp.

With the exception of financial company AIG – which gapped down to fresh new 52-week lows this morning (breaking a significant support level) – the remaining stocks are from the Technology Sector.

Take a look at prior updates of this screen so you can track the progress and outcome of prior scans:

April 18 2011 Update

April 3 2011 Update

March 21, 2011 Update

S&P 500 Price Extensions from 200d SMA Insights

The quick scan is a starting point for future analysis of these particular ‘overextended’ stocks, depending on your particular trading style or strategy.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter:  http://twitter.com/afraidtotrade

Corey’s new book The Complete Trading Course (Wiley Finance) is now available!

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