Intraday Recovery

Intraday Recovery Stocks

What are Intraday Recovery Stocks?

Intraday recovery stocks are those that experience a sharp decline during the trading session but recover significantly by the market close. This recovery often occurs due to buying interest at lower levels or positive developments during the day. These stocks are closely watched by intraday traders for potential rebound opportunities.

What do Intraday Recovery Stocks Tell Us?

Intraday recovery stocks tell us that there is resilient buying interest and potential undervaluation at lower price points during the trading day. Such recoveries often indicate a positive shift in investor sentiment or a strong market response to favorable developments. They can also suggest that the initial selling pressure was perhaps an overreaction, providing a strategic entry point for traders.

Filters Used to Sort the Above Stocks

1. Low Price 1 Day < 3% Below LTP

This filter identifies stocks currently trading within 3% above their day's low. It suggests a recovery from intraday lows, indicating that the stock found strong buying interest at these lower levels. This filter is used to spot stocks that are rebounding during the day, which might indicate a temporary undervaluation or strong buyer support.

2. Low Price 1 Day < 5% Below Open

This filter selects stocks that have recovered from being down 5% from the open. It highlights stocks that are showing stronger intraday buying momentum, suggesting a significant shift in market sentiment from negative to positive throughout the trading day. The use of this filter helps identify potential resilience or reversal opportunities after a weak opening.

3. Volume 1 Day > Volume 20D SMA x 2

This volume filter is employed to ensure that the recovery is supported by significantly higher than average trading volume, indicating strong investor interest and validation of the recovery. High volume accompanying the price recovery confirms the strength and sustainability of the upward movement, making it a reliable indicator of genuine market interest.

Key Takeaways

1. Demonstration of Resilience

Intraday recoveries are significant as they often demonstrate the resilience of a stock, bouncing back from early losses to close the day near or above the opening prices, which can be a strong indicator of underlying strength.

2. Market Correction Signals

These recoveries can signal market corrections where initial downward movements are reversed as the trading day progresses. This reversal may be due to investors assessing the stock as oversold, leading to increased buying interest.

3. Insight into Buyer Behavior

Observing intraday recoveries gives traders valuable insights into buyer behavior and market dynamics. Stocks that show quick recovery from their lows suggest that the market sentiment is positive, and there is robust support at lower price levels.

4. Potential Trend Reversals

Strong intraday recoveries can be the first sign of a potential trend reversal. Traders can use these signals to predict the beginning of an uptrend, especially when a stock consistently shows recovery patterns.

5. Confirmation Through Volume Analysis

High trading volumes accompanying recoveries provide confirmation that the upward movement is supported by substantial buying interest, and not just by lack of sellers. This helps in distinguishing between mere fluctuations and genuine recovery trends.

Intraday recovery refers to the phenomenon where stocks rebound from their lows during the trading day, often indicating strong buying interest at lower price levels. This type of recovery is particularly watched by day traders and investors looking for opportunities to enter the market at favorable prices. Stocks that show significant intraday recoveries may also signal underlying strength or a correction of an overreaction to earlier news or market events.

Low Price

3% Below LTP

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Low Price

5% Below Open

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Volume

20D Vol SMA x 2

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