A bear market occurs when the underlying stock or index falls at least 20% from its highs for more than 60 days. The strategy of buying on the decline in risk reverses into a position of risk aversion and selling on the tear. Bear markets go through periods of panic often described as throwing out the baby with the bathwater. In these situations, it is difficult to find a long winner, because it is more a question of finding actions that take least damage coming down. This relative strength often allows the “buy fading” stock to recover faster on the way back.
The key to finding those actions is using tools to help automatically select candidates, then applying filtering and analysis to arrive at a handful of potential winners. This becomes much more difficult in a bear market. MarketBeat offers a number of free and paid tools to help investors screen potential stocks for their portfolio or speculation. The MarketBeat Stock Data Tools provides a number of pre-filtered candidates for users to view. Here are some useful free tools to use to find relative strength stocks that can rebound faster in a rising market. It is crucial to consider these tools to find candidates, not to dive straight into stocks without doing proper research, and fundamental and technical analysis to gauge opportunistic pullback levels for exposure.
52 Week Highs
It’s a stock list which are hitting new 52-week highs in the bear market. Stocks on this list naturally have relative strength as they decrease market sales. Much like trying to sink a tennis ball into the tub, the ball stays buoyant when you push it down and bounces harder when you release it. It’s important to avoid the temptation to chase after these actions, especially if they are cheap meme actions that have short compression or extraordinary volume spikes. These stocks most likely create a bag carrier trail as the smoke clears and volume returns to normal. Avoid stocks that are trading at more than 20 times the average volume up double or even triple digits.
That’s why it’s important to do underlying trade research to make sure it’s not just pump-and-dump stock. It’s also worth avoiding holding companies, buyouts, shells, SPACs, and any stocks that don’t have actual business operations. Make sure you understand the reasons why the stock is going against the grain and showing relative strength. Users can also adjust filters including sector and market cap. MarketRank, Media Sentiment and Analyst Consensus are available to paid subscribers. For instance, Security Assurance Group (NASDAQ: SAFT) the stock hit new 52-week highs, trading at just 14.6 times earnings with a dividend yield of 3.62%. The 52-week range has been relatively stable between $74.95 and $99.75, offsetting the rather light volume below 100,000 shares per day.
Apply technical analysis to find opportunistic pullback levels
Using rifle paintings on weekly and daily time steps provides a precise view of the evolution of the SAFT stock. The weekly Rifles chart bottomed near $74.47 Fibonacci level (fib) before staging a rally to fresh 52-week highs at $99.75. The Rifles chart weekly uptrend has a 5-period moving average (MA) support at $93.30 with a 15-period MA at $90.66. The weekly upper Bollinger Bands (BB) are rising to $99.89. The weekly 200-period MA support is $85.00 and the 50-period MA is $84.37. The weekly BB lower sits at $78.84. The weekly weak market structure (MSL) buy triggered on the breakout of $94.34. The daily breakout from the Rifles chart has a 5-period rising MA at $96.52 and BBs above $99.81, followed by the 15-period MA at $92.70. The daily 50-period MA stands at $89.87. The daily 200-period MA support lies near the $84.72 fib below the $85.56 BB lows. Cautious investors can watch for opportunistic pullback levels at the $94.65, $92.21, $90.44, $89.94, $87.93, $86.43, and $84.72 level. The upward trajectories are from the $108.96 fib level to the $118.72 level.
Find overdue peer applicants
Instead of chasing stocks at 52-week highs, it’s also a good idea to look for peers or competitors that are lagging behind. It is important to know whether this is a company-specific reason or a group-systemic reason for relative strength. If it’s the latter, it’s worth looking for potential competitors lagging behind. These can be found by clicking on the Competitors tab on the Stock forecast, price and news page.
Negative Beta Actions
Beta is the ratio of a stock’s move relative to the benchmark S&P 500 index. A one-to-one move would give a beta of 1. A stock that moves twice as much as the index would get a beta of 2 Higher beta stocks are more volatile as they tend to outpace movements in either direction. Conversely, a negative beta would be the reverse movement of the S&P 500. Therefore, a beta of -1 would mean that the underlying stocks fall when the index rises and rise when the index falls on a basis of 1 for 1. Keep in mind that this is theoretical and based on data. Have a list of negative beta stocks can help potentially protect your portfolio against market sell-offs. It is more of a defensive trade. However, there may be many candidates to sift through.