Benzinga | Aug 17, 2021 07:14AM EDT

3 Beaten Down Stocks that Could be Ready to Bounce

Photo credit sergeitokmakov @ Pixabay

Trading against the trend can be a very difficult way to generate returns in the market, yet there usually comes a time when a stock in a downtrend simply runs out of sellers.

When this occurs, the reversal can be sharp and deliver surprisingly strong alpha for portfolios.

The key is determining the right time to add shares of stocks that have been beaten down without putting too much capital at risk.

Timing reversals in stocks that have been dealing with relentless selling is certainly tricky and not for the faint of heart.

WIth that said, innovative market behavior analysis tools like OVTLYR can help investors gain the confidence needed to potentially catch a bottom.

The company's platform helps provide insight into how biases and irrationalities of other market participants drive their investment decisions and how to use that information to your advantage.

By leveraging artificial intelligence to recognize trends and predict where pockets of fear and greed create opportunities, OVTLYR can potentially pick up on trend reversals before they happen.

The tool is picking up several potentially rewarding counter-trend trades right now that might be worth a look.

Let's take a deeper look at three beaten down stocks that could be ready to bounce below.

The Boston Beer Company (NYSE:SAM)

First up is The Boston Beer Company, which is one of the largest craft brewers in the United States and a stock that has been dealing with a sharp sell-off following disappointing Q2 earnings.

After a massive gap-down following the report, the stock continues to decline and could be nearing a reversal point in the coming trading sessions given its extreme oversold levels.

According to the OVTLYR bidirectional volatility (3-month timeline view) pictured below, the stock is in such an extreme negative position that it could be a solid reversal candidate at this time.

AXSOME Therapeutics Inc (NASDAQ:AXSM)

Next, we have Axsome, a biopharmaceutical company developing novel therapies for the management of central nervous system (CNS) disorders for which there are limited treatment options.

Axsome is currently down considerably from its 52 week high of $90 and has been selling off on heavy volume following the company's latest earnings release.

According to the OVTLYR bidirectional volatility (Histogram view) pictured below, the stock is in such an extreme negative position that it could be a solid reversal candidate at this time.

Fibrogen Inc (NASDAQ:FGEN)

Next, we have Fibrogen, a biopharmaceutical company that discovers, develops, and commercializes therapeutics to treat serious unmet medical needs.

Biotech can be particularly volatile at times, but it's likely that many investors weren't expecting Fibrogen stock to drop over 66% year-to-date.

If you are feeling bold and are willing to take a shot at a stock that has been absolutely decimated this year by sellers, the OVTLYR platform could be providing a signal that the price action might reverse.

Here is a quick snapshot of their Heatmap/Oscillator view where you see most increased fear in most recent time which can be a great buying opportunity according to their data.

It will be fascinating to see whether or not these three stocks can bounce after such heavy moves to the downside.

While adding shares of beaten down stocks like the three mentioned above certainly comes with its fair share of risk, with the help of the OVTLYR platform you can potentially define a low-risk entry point if you are interested in trying to catch a reversal.