Bears Beaten Back as Markets Wake Up to Oversold Conditions
Bears had a tough day on Thursday as markets rallied amid chatter about a broad short squeeze.
In a note Thursday, Strategas technical analyst Chris Verrone warned shorts the market was oversold, with 45% of stocks trading at 20-day lows. In his view, 50% is a good signal a low is in place. In addition, the percent of stocks trading above 20-DMA dropped below 20%, another signal of oversold conditions. Additional signals were seen in the VIX curve and the fact that European stocks haven't blinked during the U.S. budget standoff.
Technicals aside, the market was clearly in rally mode with many stocks paring losses from early in the week. Traders have been paying close attention to two groups of stocks recently. This includes market leaders like Facebook (Nasdaq: FB) and Netflix, Inc. (Nasdaq: NFLX). Both stock rallied on Thursday. Tesla Motors, Inc. (Nasdaq: TSLA), another stock in the limelight, climbed early, but pared gains mid-morning after it was learned that FMR LLC lowered its stake.
Biotech stocks, another area under pressure recently, also gained on Thursday. Celgene Corporation (Nasdaq: CELG) and Gilead Sciences Inc. (Nasdaq: GILD) were notable gainers. iShares Nasdaq Biotechnology (Nasdaq: IBB) gained 2%.
In a note Thursday, Strategas technical analyst Chris Verrone warned shorts the market was oversold, with 45% of stocks trading at 20-day lows. In his view, 50% is a good signal a low is in place. In addition, the percent of stocks trading above 20-DMA dropped below 20%, another signal of oversold conditions. Additional signals were seen in the VIX curve and the fact that European stocks haven't blinked during the U.S. budget standoff.
Technicals aside, the market was clearly in rally mode with many stocks paring losses from early in the week. Traders have been paying close attention to two groups of stocks recently. This includes market leaders like Facebook (Nasdaq: FB) and Netflix, Inc. (Nasdaq: NFLX). Both stock rallied on Thursday. Tesla Motors, Inc. (Nasdaq: TSLA), another stock in the limelight, climbed early, but pared gains mid-morning after it was learned that FMR LLC lowered its stake.
Biotech stocks, another area under pressure recently, also gained on Thursday. Celgene Corporation (Nasdaq: CELG) and Gilead Sciences Inc. (Nasdaq: GILD) were notable gainers. iShares Nasdaq Biotechnology (Nasdaq: IBB) gained 2%.