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Rebound: Stats say Dow correction is over for now

Traders work on the floor of the New York Stock Exchange.
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Traders work on the floor of the New York Stock Exchange.

Now in correction territory, the Dow Jones industrial average should rebound significantly before the week is out, if history is any guide.

This conclusion is based on statistical measures from Kensho, a quantitative analysis program used by hedge funds, of the overall benchmark's level and the prices of its members.

On Wednesday, the Dow closed three standard deviations below its 50-day moving average. Based on statistics going back to 1981, there is a 73 percent probability the Dow moves higher over the next two days before it moves lower again, according to Kensho.

This oversold condition for markets is "where bottoms have formed recently," said Gavin Parks, an independent trader. "Even if the market is in a correction with more downside to come, a bounce is highly likely in the short term."

Through trading on Wednesday, all the Dow members except one are statistically "oversold" based on their prices relative to their 50-day moving average, according to Kensho.

Here are the stocks set to rebound the most, if history is any guide:

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