Technology stocks may or may not be the best investments right now. But here are four tech stocks that short term traders can look to that are likely to outperform the average stock over the next few days.
Seasonality experts from Hirsch to Cramer tell us that the time to buy tech stocks as an investment is in the summer, when technology stocks—along with most of the market—tend to be on the sleepy side. The theory suggests buying these overlooked equities in the summer and selling them as they rally into either back to school season in the fall or, if it's a good year, the holiday shopping season in the winter.
But for short term traders—especially short term traders who like to buy weakness and sell strength—there's no reason to wait for the weather. Just about any day may be a great day to trade tech stocks.
And that includes the next five to eight days. As of late in trading on Wednesday, a number of stocks have had their Short Term PowerRatings upgraded, reflecting even greater potential for gains in the near term.
Some people misunderstand what we mean when we refer to stocks becoming more attractive as they move lower, confusedly thinking that this could potentially apply to all stocks.
This is wrong-headed. When we refer to stocks becoming more attractive as they move lower, this is always in the context of the stock trading above its 200-day moving average. We say it all the time. But it is an important point that apparently still bears repeating.
Strong stocks, stocks that are trading above their 200-day moving averages become more compelling as short term trading candidates as they move lower and closer to that 200-day moving average. Stocks that pull back to the 200-day moving average are regressing to the mean. Our strategy is to look for stocks that are very extended from this mean—usually by rallying far above it—and to buy those stocks as they move closer to the mean.
Below are four stocks—all from the technology sector—that are now in the midst of those regressions to the mean. All four have earned Short Term PowerRatings upgrades as of late in the trading day on Wednesday, with one stock being upgraded from a thoroughly average 6 all the way to 8.
Axsys Technologies (AXYS | Quote | Chart | News | PowerRating). Short Term PowerRatings upgrade from 8 to 9. RSI(2): 2.50
Actel Corporation (ACTL | Quote | Chart | News | PowerRating). Short Term PowerRatings upgrade from 8 to 9. RSI(2): 7.53
Dionex Corporation (DNEX | Quote | Chart | News | PowerRating). Short Term PowerRatings upgrade from 7 to 8. RSI(2): 10.30
Veeco Instruments (VECO | Quote | Chart | News | PowerRating). Short Term PowerRatings upgrade from 6 to 8. RSI(2): 11.95
Our research found that stocks with Short Term PowerRatings of 8 outperformed the average stock by a margin of more than 8 to 1 within the next five days. Stocks with Short Term PowerRatings of 9 fared even better, besting the average stock by a margin of more than 13 to 1 over the same time period.
There are five things that every successful short term stock trader knows about trading markets like these. We have published all five in a new, special report called "5 Secrets to Short Term Stock Trading Success" now available for free. Learn what key factors are involved in turning mediocre speculators into professional-grade, short-term stock traders—and how our Short Term PowerRatings can play a part. Click here for your free report—or call us today at 888-484-8220.
