Several large and popular U.S. stocks are due for a so-called oversold bounce after falling rapidly to chart levels that in the past have marked a turnaround.
CNBC used hedge fund analytics tool Kensho to determine which large U.S. stocks have fallen the most from their 200-day moving average, one of the most popular technical indicators used by investors to analyze price trends. We then screened that group for stocks that have a history of posting positive gains one month after reaching that statistically oversold position.
The metric, the average price of the last 200 days, is often considered a barometer of whether securities are in a healthy long-term trend. But a big swing above or below the 200-day moving average can also suggest that a bounce is coming.
Swoons in shares of Nvidia, General Electric and Celgene, for instance, have preceded sharp reversions higher in the past. With each of those stocks more than 2.5 standard deviations below their 200-day moving average, history predicts them rallying 30.6 percent, 17.3 percent, and 10.4 percent, respectively, over the next 22 trading days, or one month.
Nvidia, General Electric and Celgene are down 48 percent, 32 percent and 25 percent, respectively, since the start of October and the fourth fiscal quarter of 2018. Those stocks have tracked a broader sell-off in the U.S. equity market; the S&P 500 is down 9.6 percent this quarter and negative so far this year.
Disclosure: NBCUniversal was a minority investor in Kensho prior to the firm being acquired by S&P.