After getting fantastic feedback on my look at the most oversold names in the S&P 500, I decided to share a similar review of some oversold Mid-Cap names. As I explained previously, this is the time of year when investors both big and small dump losers for tax or face-saving reasons, often creating opportunities for entries into either long-term investments or intermediate-term trades. The smaller the stock, often the more exaggerated the selling pressure can be, so looking into the S&P 400 Mid-Cap Index is actually more interesting to me. This year provides another interesting angle, as many stocks with big gains are getting hit as I described recently, with owners looking to book gains with existing low tax-rates.
Before I go on, I want to share my definition of oversold, with the caveat that there is no one correct way conceptually to define it. The system I use was invented by StockVal, which was acquired by ThomsonReuters a few years ago. The basic math is to evaluate the current price compared to a long-term moving average in the context of the volatility of the stock over the past five years. The output on this price momentum indicator can be thought of in terms of standard deviations from the norm. The 12 most oversold names ranged from -1.19 to -2.88. Without going into the exact scores for each name, here is the list of companies:READ MORE at Seeking Alpha