Oversold: 8 stocks ready to pop

Published Tue, Apr 21 20157:04 AM EDTUpdated Tue, Apr 21 20159:06 AM EDT

Despite the market trading sideways this year, many stocks in the S & P 500 have fallen significantly from their historical trading range and may be due for a pop as buyers search for value, according to chart analysts. These analysts often look for extreme levels in the market as a way to find buying or selling opportunities. The idea is that—statistically—asset classes tend to revert to their averages. Consider the energy sector, which was among the worst performing groups this year. Since the price of crude reached a six-year low last month, however, the commodity posted a 35 percent rally and energy stocks have become the best performers this year. Within the S & P, one-fifth of the index components are down more than 10 percent for the year, compared with a 2 percent gain for the index. Technology and consumer discretionary stocks are among the hardest hit and could be do to snap back. Read More For small traders, oil rivals Apple in popularity Using the quantitative tool Kensho, we searched for stocks in the S & P 500 that are likely to revert back toward their 50-day moving average. First, we identified companies trading more than two standard deviations away from their long-term trends. Then, based on similar patterns in the past, we grouped the ones that have a high probability to move back to their mean. As an additional step, we made sure the long-term trends were bullish, signaling the current drop may be just a bump along the road. Nordstrom is down 7 percent in just the past month. According to Kensho, the probability of Nordstrom reverting back to its mean stands at 93 percent. Other names that are trading in recent oversold territory include C.H. Robinson , Fidelity National Information and Legg Mason . Another way to bet on this trend is buy purchasing exchange traded funds that mimic the performance of the entire sector. Among the S & P groups, energy and consumer discretionary stocks are the most overbought, while utilities are the most oversold. Disclosure: NBCUniversal, parent of CNBC, is a minority investor in Kensho.

Trader on the floor of the New York Stock Exchange.

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These analysts often look for extreme levels in the market as a way to find buying or selling opportunities. The idea is that—statistically—asset classes tend to revert to their averages.

Consider the energy sector, which was among the worst performing groups this year. Since the price of crude reached a six-year low last month, however, the commodity posted a 35 percent rally and energy stocks have become the best performers this year.