It wasn't the sort of sell-off that traders have become accustomed to, but yesterday's declines have helped create a few opportunities for traders looking for stocks that are likely to outperform the average stock over the next few days.

There are far fewer bullish set-ups today than in previous days, based on our listing of high Short Term PowerRatings stocks. I suspect this reflects the markets indecisiveness, as neither buyers nor sellers apparently feel confident enough at this moment to push stocks further toward one extreme or the other.

It is in situations like these when a trader's discipline is tested--and why it is important to have a method when looking to buy and sell stocks. Did the market bottom in mid-March? Was yesterday's profit-taking the beginning of a return to the bearishness that has characterized the markets since October? Interesting questions, but neither of them needs to be a preoccupation for traders working in the short-term time frame.

As short-term traders, we are interested first in whether or not the markets are trading above their 200-day moving averages. That sets let us know exactly what we are looking for in stocks. If the markets are above their 200-day moving averages, then we know that we have a bias in favor of buying stocks rather than selling short, and we are more likely to give the benefit of the doubt to a high Short Term PowerRating stock even if it is trading below the 200-day moving average.

If, on the other hand, the markets are trading below the 200-day moving average, then we need to be much more discriminating about our stock choices. Here, our bias is more neutral and we are almost as likely to sell stocks short as we are to buy. The key distinction is that we are in this instance only looking to buy stocks that appear strong--in other words, that are trading above the 200-day moving average. The stocks we are willing to sell short are those stocks that appear weak. By "weak" we mean stocks that are trading below their 200-day moving averages.

It sounds simple. But when you combine some basic trading rules with our Short Term PowerRatings, trading decisions become a great deal more straightforward. Also, many of the issues that could potentially confuse and obscure the task at hand--buying low and selling high--do not interfere in any way whatsoever. The Fed, the presidential election race, the occupation of Iraq... as important as these issues are in general, there is no reason for them to intrude on the slow steady process of assessing where markets are overextended and knowing which overextensions to buy and which to sell.

Here are a set of three such overextensions that traders should be more interested in buying than selling. And the weakness we are seeing early in Thursday trading may provide traders with the opportunity they need to take positions at advantaged levels.

Note that all three stocks in today's report have Short Term PowerRatings of 8. Our research, based on millions of simulated short-term stock trades, revealed that stocks with Short Term PowerRatings of 8 outperformed the average stock by more than 8 to 1 over the next five days.

In addition to the PowerRatings charts below, I have listed the 2-period Relative Strength Index values for each stock. This will help traders see just how oversold some of these stocks are. We consider a stock to be oversold with 2-period RSI values of less than 10. We consider a stock to be extremely oversold with a 2-period RSI that is less than 2.

Multi-Fineline Electronix (MFLX | news | PowerRating | PR Charts ). RSI(2): 6.77

CHC Helicopter Corporation (FLI | news | PowerRating | PR Charts ). RSI(2): 13.34

Alpharma Inc. (ALO | news | PowerRating | PR Charts ). RSI(2): 8.38

For more simple and straightforward tips on short-term stock trading, consider getting a copy of our free report, written especially for those who trade stocks in the short-term "sweet spot" of five to eight days. Click here to get your copy of "5 Secrets to Short Term Stock Trading Success"--or call us at 888-484-8220--and see what the TradingMarkets approach to trading can do to make you a better trader.

David Penn is Senior Editor at TradingMarkets.com.