Kapitall Strategies: Trading The Short Term Rebound (5 Days)

(List compiled by Eben Esterhuizen, CFA)

Strategy: If a stock is down more than 3% since yesterday’s close, buy it, and sell it on the close 5 trading sessions later.

But which stocks seeing losses today might be good candidates for this strategy? 

To help you get ideas, we started with a universe of about 200 stocks that have declined by more than 3% since yesterday’s close (i.e. strategy candidates).

We went back in time, and evaluated how many times these stocks rebounded from similar losses over the last quarter. 

For each backtested rebound strategy, we’ll also report the average return made on the investment (ignoring transaction costs).

Recent history suggests that these stocks are resilient, and may rebound from today’s sell-off. That said, it’s important to point out that past performance is no guarantee of future results.

In other words, just because these stocks rebounded from similar losses over the last quarter, there is no guarantee that they will do so again today.

As always, use this list only as a starting point for your own analysis.

For each stock listed, we’ll also include the annual performance.

analyse These Ideas (Tools Will Open In A New Window)

1. Access a thorough description of all companies mentioned
2. Compare analyst ratings for all stocks mentioned below
3. visualise annual returns for all stocks mentioned

1. Royal Bank of Scotland Group plc (RBS): Foreign Money centre Banks Industry. At time of writing (3:10pm ET), the stock is down 3.81% since yesterday’s close. Over the last quarter, there has been 1 day when the stock lost more than 3% in a session. Trading the above mentioned strategy on those days would have returned an average of 10.87% over the next 5 trading days. The stock has returned -30.25% over the last year.

2. Star Scientific, Inc. (CIGX): Cigarettes Industry. At time of writing (3:10pm ET), the stock is down 3.94% since yesterday’s close. Over the last quarter, there have been 7 days when the stock lost more than 3% in a session. Trading the above mentioned strategy on those days would have returned an average of 5.52% over the next 5 trading days. The stock has returned 89.72% over the last year.

3. ValueVision Media Inc. (VVTV): catalogue & Mail Order Houses Industry. At time of writing (3:10pm ET), the stock is down 4.27% since yesterday’s close. Over the last quarter, there have been 12 days when the stock lost more than 3% in a session. Trading the above mentioned strategy on those days would have returned an average of 5.41% over the next 5 trading days. The stock has returned 311.54% over the last year.

4. WellCare Health Plans, Inc. (WCG): Health Care Plans Industry. At time of writing (3:10pm ET), the stock is down 5.43% since yesterday’s close. Over the last quarter, there have been 4 days when the stock lost more than 3% in a session. Trading the above mentioned strategy on those days would have returned an average of 5.06% over the next 5 trading days. The stock has returned 70.03% over the last year.

5. TAL Education Group (XRS): Education & Training Services Industry. At time of writing (3:10pm ET), the stock is down 4.31% since yesterday’s close. Over the last quarter, there have been 4 days when the stock lost more than 3% in a session. Trading the above mentioned strategy on those days would have returned an average of 4.98% over the next 5 trading days. The stock has returned 0% over the last year.

6. WebMD Health Corp. (WBMD): Healthcare Information Services Industry. At time of writing (3:10pm ET), the stock is down 3.91% since yesterday’s close. Over the last quarter, there have been 5 days when the stock lost more than 3% in a session. Trading the above mentioned strategy on those days would have returned an average of 4.83% over the next 5 trading days. The stock has returned -23.82% over the last year.

7. Lifepoint Hospitals Inc. (LPNT): Hospitals Industry. At time of writing (3:10pm ET), the stock is down 5.71% since yesterday’s close. Over the last quarter, there have been 1 days when the stock lost more than 3% in a session. Trading the above mentioned strategy on those days would have returned an average of 4.57% over the next 5 trading days. The stock has returned 20.03% over the last year.

8. Team Health Holdings, Inc. (TMH): Staffing & Outsourcing Services Industry. At time of writing (3:10pm ET), the stock is down 3.68% since yesterday’s close. Over the last quarter, there have been 3 days when the stock lost more than 3% in a session. Trading the above mentioned strategy on those days would have returned an average of 4.55% over the next 5 trading days. The stock has returned 67.89% over the last year.

9. InterDigital, Inc. (IDCC): Wireless Communications Industry. At time of writing (3:10pm ET), the stock is down 3.94% since yesterday’s close. Over the last quarter, there have been 8 days when the stock lost more than 3% in a session. Trading the above mentioned strategy on those days would have returned an average of 4.35% over the next 5 trading days. The stock has returned 151.2% over the last year.

10. Pantry Inc. (PTRY): Grocery Stores Industry. At time of writing (3:10pm ET), the stock is down 3.59% since yesterday’s close. Over the last quarter, there have been 6 days when the stock lost more than 3% in a session. Trading the above mentioned strategy on those days would have returned an average of 4.19% over the next 5 trading days. The stock has returned -1% over the last year.

Interactive Chart: Press Play to see how analyst ratings have changed for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.


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