5 Top Nasdaq Pullbacks for Traders: DMRC, HIMX, BRKR, STEC, RAME

The markets finally responded to increasingly oversold conditions with a strong rally on Wednesday, sending the Nasdaq Composite higher by more than 3%.

The giddiness was evident in the financial media, but the context in which stocks act remains the same: the Nasdaq is still below the 200-day moving average, and what is now a two-day rally in the Nasdaq has taken that market’s 2-period RSI from a little over 17 to just shy of 87.

This in all likelihood means that stocks will have an opportunity to move lower. We are seeing the number of high Short Term PowerRatings stocks subside as of Wednesday’s close – though there remain some stocks that have become or remained oversold in spite of the buying frenzy and short-covering that took place yesterday. With regard to these opportunities, looking for these stocks to pull back further and waiting for intraday weakness of 4% or more, are two approaches that will likely be worth taking as the markets continue to bounce – likely dragging stocks higher with them.

Digimarc Corporation (DMRC | Quote | Chart | News | PowerRating) Short Term PowerRating 10. RSI(2): 2.51

Himax Technologies Inc. (HIMX | Quote | Chart | News | PowerRating) Short Term PowerRating 9. RSI(2): 3.89

Bruker Corporation (BRKR | Quote | Chart | News | PowerRating) Short Term PowerRating 9. RSI(2): 3.96

Stec Inc. (STEC | Quote | Chart | News | PowerRating) Short Term PowerRating 8. RSI(2): 47.04

Ram Energy Resources Inc. (RAME | Quote | Chart | News | PowerRating) Short Term PowerRating 8. RSI(2): 2.41

Of the five, HIMX stands out as a stock that has experienced seven consecutive down days – an indicator our research suggests often leads to higher prices in the near-term. Bruker Corporation and Ram Energy Resources had also experienced a string of consecutive down days – totaling four – in addition to having down days on five of the past six

David Penn is Senior Editor at TradingMarkets.com.