5 Stocks for the Next 5 Days: Selling the Buying in DRIV, LMT, PAY, PLCE, TIE

We last looked at an oversold market in gold stocks and an increasingly overbought market in semiconductors. Following up on some of the stocks and funds we were watching, we can see that the ^GDX^ became deeply oversold last week, closing in oversold territory above the 200-day moving average.

Not only has GDX closed in oversold territory for two days in a row over the past five days, the ETF has also closed lower for four out of five trading days.

GDX has yet to rally into strength with a 2-period RSI of more than 70 (although GDX did finish above its 5-day moving average on Friday.)

Of the two gold stocks, the pullback in ^KGC^ was especially interesting. KGC closed in oversold territory on Wednesday the 14th and, one day later, traded more than 2% below Wednesday’s close intraday.

Intraday pullbacks like these allow swing traders to buy stocks AFTER they have already closed in oversold territory. This entry strategy is one quantified way to take advantage of the extra bit of panic selling that typically takes place just before a market bottoms in the short term and moves higher.

Semiconductors were the other sector worth noting, as a number of semiconductor stocks became increasingly overbought below the 200-day. Here, while shares of ^SNDK^ have continued to climb, overbought conditions in ^MU^ have brought sellers to market. Ahead of trading on Tuesday, the stock is down three in a row after finishing lower by more than 2% on Monday.

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Here are 5 Stocks for the Next 5 Days

Selling on Monday has helped moderate exceptionally overbought conditions that had developed ahead of the first trading day of the week. Among those stocks that are still trading at overbought levels below the 200-day are shares of ^DRIV^ and ^LMT^.

Both stocks have closed higher for six days in a row below the 200-day, finishing in overbought territory for the past four consecutive sessions.

Up six in a row below the 200-day and ending in overbought territory for three days in a row are shares of ^PAY^. The stock ended trading on Monday higher by more than 1% and has been trading below its 200-day since mid-July.

^PLCE^ has gained for seven straight trading days below the 200-day, closing in overbought territory for five of those seven sessions.

Shares of ^TIE^ have spent the last three days in overbought territory. Trading below its 200-day, the stock has closed higher for five straight days. Like all of the stocks in this week’s 5 Stocks for the Next 5 Days column, TIE has a 2-period RSI of more than 98.

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David Penn is Editor in Chief of TradingMarkets.com