I’m always on the look out for stocks that are stabilizing or have stabilized for a few days after huge down trends. Technicians will call this pattern bearish flags, which very simple its a bearish pattern that historically has led to lower prices, however since 2009 this pattern for the most part has turn into a bullish pattern. If you follow me on stocktwits or twitter you probably have seen me tweet about stocks that are exhibiting a character change, the last 2 I posted on that topic were $RAX 6/21/2013 and $SWI on 6/27/2013. These stocks if picked off correctly can lead to a decent short term risk reward trade. I tend look for the stock to stabilize and get above a moving average that has acted as resistance for a long time, it is normally the 20 day moving average.
Today as I was going through one of my scans I notice that a few stocks from the region that were exhibiting stabilization after deep corrections. I find it very encouraging when I find a cluster of stocks from the same sector or region showing the same pattern similar to what I saw in the Miners $NUGT $GDX on 6/28/2013.
Some Brazilians stocks are showing this pattern and a few of them had inside days yesterday and also take notice of the string of Doji type days; $BSBR $PBR.A $SID $GFA $GOL $EWZ $TAM. Key here is to look for strength before jumping in and use the most recent low as a stop.
The Brazilian outlier; $TAM