Here at Schaeffer's, we look at several technical indicators to help identify bullish and bearish stock picks. Over the past year, one of the most successful predictors of an uptrend has been when a stock crosses north of its 50-day moving average, according to data from Schaeffer's Senior Quantitative Analyst Rocky White. While no single indicator has a 100% success rate, our Expectational Analysis® methodology -- which takes into account technical, fundamental, and sentiment analysis -- gives us a leg up in finding stocks that could be ripe for more upside. Using this approach, we've identified two "penny stocks" that could be a bargain for bulls right now: homebuilder Hovnanian Enterprises, Inc. (NYSE:HOV) and oil-and-gas stock W&T Offshore, Inc. (NYSE:WTI).
Homebuilders have been in the spotlight this week, with February housing starts hitting the second-highest level since the Great Recession, and the NAHB housing market index surging by more than expected last month. Against this backdrop, HOV shares retook their 50-day moving average for the first time since late January, essentially negating last week's post-earnings slide. The stock is also trading north of the $2.40 area, which represents a 38.2% Fibonacci retracement of HOV's post-election rally to $2.96.
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