The S&P 500 hit all-time record highs in mid-July this summer. Most investors
were not braced for what happened next, as the S&P fell -11.9% to monthly lows
in just a few weeks. Just last week, the Fed cut 2 key interest rates, and now
the S&P has rallied to trade just -2% from the original all-time highs. Just a
quick glance at the chart illustrates how volatile the markets have been in the
last 2 months.
How does the everyday trader get ahead in such a dangerous market?
TradingMarkets offers a proprietary stock rating
method called
PowerRatings (for Traders). This
method ranks stocks 1-10 and the higher the rating, the greater the one-week
historical gain has been. Stocks rated 9 and 10 have outperformed the average stock by 12 to 1 since
1995 and ideally are the stocks to focus on each day. Stocks rated 1 and 2 on
average have lost money, and you want to know these stocks in order to avoid
them. To validate PowerRatings performance, more than 8.2 million daily trades were
looked at from Jan. 1, 1995 to Dec. 1, 2005 -- over 10 years worth of data. The
results are based on the average 5-day performance.
Last week, we highlighted a few potential trade ideas, pointing out what the
stock's PowerRating was at the time, and how the stock had been performing
lately. We do not look for things like earnings or news; we look for
time-tested, historical edges which are backed by hard data.
XM Satellite Radio and SiRF Technology Holdings were both featured in our
list of PowerRatings 1's &2's article (PowerRatings
Stock Highlighs - XMSR and SIRF) last Friday. Let's see
how they have performed since-
XM Satellite Radio (XMSR | Quote | Chart | News | PowerRating)
XM Satellite Radio (XMSR | Quote | Chart | News | PowerRating) had a PowerRating of 2 last Friday. The
stock had been pushing towards its 200-day moving average in an extended rally
to the upside. PowerRatings (for Traders) looks for historical edges based on
extended conditions. In this case, XMSR was a weak stock that became extended to
the upside, leading to a -7% decline to recent lows.
SiRF Technology Holdings (SIRF | Quote | Chart | News | PowerRating)
SiRF Technology Holdings (SIRF | Quote | Chart | News | PowerRating) had a high PowerRating of 2 last
Friday. Notice that both of these charts look very similar. In both instances,
we see an overall weak stock rallying to overbought conditions, which then leads
to a selloff as the stock reverts to its mean conditions and price. In this
case, SIRF fell about 7% over 5 trading days.
Click here
to sign up for a PowerRatings class
presented by Steve Primo, our Director of Education.
Start your 7-day Free Trial and see how PowerRatings (for
Traders) can improve your trading.
