NEW YORK ( TheStreet) -- As overwhelming as it may be at times, acquiring stocks when they are loathed by others demonstrates an aptitude to detach sensation from logic. Companies become oversold when emotion takes over in the market and thrusts the prices lower.
The desire to escape the agony of additional losses, results in many selling at the particular instant they should buy. Of course, occasionally stocks become oversold as a result of proper money-management stop-losses triggered. Having a stop loss is vital to investing survival and your exit plan must be put in place before considering an entry.
Typically, stocks do not become oversold on a daily or weekly timeframe because of stop-losses triggered. It's more often the result of emotion dictating selling, and emotional selling sets up our opportunity.
Here is a list of five candidate stocks oversold on my charts. My ideal technique to exploit the feebleness is to sell put options or write covered calls (pretty much the same thing). The typical trade lasts three to four weeks.
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