High Probability Stock Hunting in Cabela’s

If there is anything to the adage of “investing in what you know,” then there must be plenty of happy hunter/investors who have benefited from the breakout and move higher in shares of Cabela’s (NYSE: CAB) in 2012. Rallying to a new, six-month high in early February, shares of CAB broke free from a short-term trading range to climb more than 20% in just eight days.

Gains like these make profit-takers of us all, and CAB has begun to drift lower in the days since its major move in the middle of last month. The stock closed lower for three days in a row, paused for a session, then resumed its descent.

After another three-day sell-off, we decided to highlight the stock in 7 Stocks You Need to Know:

3. Cabela’s

Last % Change: (0.23%) Edge: +0.8% RSI(2): 4.49

Days Down: 3 in a row New Lows: 5-day: yes 2-week: no

Notes: Down for six out of the most recent seven trading days, shares of specialty retailer Cabela’s Inc. have spent the last three trading days in technically oversold territory above the 200-day moving average.

Additionally, short-traders and active investors with subscriptions to PowerRatings also were able to access up-to-date and historical ratings data on Cabela’s heading into Friday’s open.

Cabela’s finished higher the next day.  And the day after that. Three days later, the stock had gained more than 3%, and was closing in on new, two-week highs.

By the way, this same edition of 7 Stocks You Need to Know that included Cabela’s was headlined by Exxon Mobil (NYSE: XOM). Shares of Exxon had become increasingly oversold as the oil major was seen to be underperforming its peers. Shares of Exxon Mobil closed lower on Friday, but buyers have moved back into the stock in the first few days of the week, sending it higher by more than 2% as of midday on Tuesday in the days since we highlighted the stock in 7 Stocks You Need to Know.

From the quantified research of How Markets Really Work by Larry Connors and Cesar Alvarez, to the massive stock and ETF database of PowerRatings, 7 Stocks You Need to Know is a daily, idea-driver for short-term traders and active investors looking to use short-term volatility to fuel high probability trades.

7 Stocks You Need to Know is available for free every evening before the market opens. To start your free subscription today, click the link below.

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David Penn is Editor in Chief of TradingMarkets.com

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