Each day, TradingMarkets publishes a new list of TradingMarkets
Stock Indicators, which are are based upon our latest quantitative research.
We will be featuring 1 list per day, free of charge, to help explain the
methodologies and to coach new users; these lists
highlight trading edges backed by our database of more than 7-million historical
simulated trades.
Today's focus list from the
indicators is the
Gaps Down 5% or More list. These are stocks that gap down by 5% or more and
are trading above their 200-day moving average. Our research shows that stocks
trading above their 200-day moving average that gap down by more than 5% have
shown positive returns, on average, 1-day, 2-days and 1-week later.
Historically, these stocks have provided traders with a significant edge.
Here is today's focus list:
The recent rally has significantly narrowed the
universe of stocks which are eligible for this list. Were the market selling off
or trading choppily, this list would be much longer. Also keep in mind that this
is not a trade recommendation, but only an example from a list of our
indicators. Always have your own methodologies and trading strategies in place;
do not blindly other people's advice.
Let's take a closer look at the only stock on the list:
Hersha Hospitality Trust (HT | Quote | Chart | News | PowerRating)
HT is trading in a confirmed uptrend, well above its 200-day moving
average. On Friday, HT gapped down around 8%. However, notice that HT actually
gained on the day, trading higher than the previous close, despite a massive gap
lower. After an extremely weak opening, there were buyers in the market for this
stock; a stock trading above its 200-day moving average will technically always
be considered a strong stock. The TradingMarkets mantra is to "buy weakness, and
sell strength," because our database of millions of trades repeatedly shows
that the edge exists when a strong stock is showing weakness.
Check out our
latest quantified research articles
here. If you don't already have a TradingMarkets subscription, click here
for a free 7-day trial. Check back daily for 7 Trading Ideas for Today,
and develop your own watchlist of stocks with historically-backed edges.
John Lee
Associate Editor
johnl@tradingmarkets.com
Reminder: We are in no way
recommending the purchase or short sale of these stocks. This article is
intended for education purposes only. Trading should be based on your own
understanding of market conditions, price patterns and risk; our information is
designed to contribute to your understanding.
