One of the most oversold sectors as of midweek, health care exchange-traded funds (ETFs) and stocks are increasingly likely to begin attracting short-term buying interest.
The Health Care Select Sector SPDR ETF (XLV), to take an overview of the sector, closed lower for five out of six trading days to finish short-term oversold heading into Wednesday's session. Trading near breakeven levels on Wednesday, the stock is still likely to open oversold when trading begins this morning.
Going deeper into the health care sector, we can identify a number of individual stocks that have pulled back to levels where, historically speaking, traders have been more inclined to buy than sell in the short term. Closing lower for three days in a row are both Coventry Health Care (CVH) and Community Health Systems (CYH). Shares of CVH are pulling back from a test of intermediate-term highs late last week, and have retreated to near, two-week lows in addition to ending trading on Wednesday in technically oversold territory above their 200-day moving average.
For its part, Community Health Systems has only been trading in bull-market territory since the second half of January. But the pullback in the stock is CYH's second significant move lower in just under a month.
The previous pullback in CYH came at the beginning of March in the form of a five-day correction that took the stock into short-term oversold territory for three days in a row. In less than two weeks, CYH was up nearly 5% and trading at new, 10-day highs.
Ahead of today's open, shares of Community Health Systems are back in oversold territory after closing lower for three consecutive sessions.
Other health care stocks that short-term traders and active investors may want to keep an eye on include Universal Health Services (UHS). Shares of UHS have pulled back for three consecutive trading days.
"If you rely on data, not opinion, to make your trading decisions, and you want the ability to choose the best variations to trade your strategies, you'll find a lot to interest you in this guide."
here to learn more about How to Trade High Probability Stock Gaps by Larry Connors and Cesar Alvarez.
David Penn is Editor in Chief of TradingMarkets.com
Disclaimer: The views represented in this column are those of the individual authors only, and do not necessarily represent the views of Schaeffer's Investment Research.
The Case for Big Moves in IWM and QQQ
Featured Partners: AOL DailyFinance
© 2014 Schaeffer's Investment Research, Inc. 5151 Pfeiffer Road, Suite 250, Cincinnati, Ohio 45242
Phone: (800) 448-2080 FAX: (513) 589-3810 Int'l Callers: (513) 589-3800 Email: firstname.lastname@example.org
All Rights Reserved. Unauthorized reproduction of any SIR publication is strictly prohibited.
Market Data provided by QuoteMedia.com | Data delayed 15-20 minutes unless otherwise indicated.