When more than 75% of the high Short Term PowerRatings stocks are hailing from the Nasdaq, it doesn't take a rocket scientist to know where to be looking for stocks that are likely to beat the market over the next few days.

The Nasdaq lead both the Dow industrials and the S&P 500 yesterday. But there are plenty of stocks in the Nasdaq that are still in pullback mode. These pullbacks were made possible in part by the sideway action in the major market indexes this week. That sideways trading allowed for the sizable number of exceptionally overbought stocks we saw early in the week work some of those overbought conditions off.

The result is two-fold: fewer overbought stocks to short and more oversold stocks to buy.

With the premarket futures indicating weakness to start the Friday trading session, it is likely that these stocks will continue to pull back even further. As I wrote recently, we are almost looking for two types of pull back when it comes to trading stocks like these. The first pull back is the one that lowers the stock to a level at which it begins to become attractive.

This often occurs after a stock has suffered multiple consecutive lower lows or down days, or after a stock has been hit hard and is off by 10% or more in a relatively short period of time. Another tell that a proper pull back has developed is to look at the 2-period Relative Strength Index. When the 2-period RSI crosses under 10--or, even better, below 2--we know we are looking at a stock that has experienced a great deal of selling pressure. In the context of stocks that are otherwise strong and trading above their 200-day moving averages, this selling pressure is an opportunity to buy good stocks on sale.

The second pull back refers to intraday weakness. Ideally--and this situation happens far more frequently than it may seem--we want a stock that has been moving lower to move lower one more time in order to trigger our entry. For example, if we see a high Short Term PowerRating stock that has pulled back and looks attractive as a buying candidate, we will place a limit order as little as 1% or as much as 8% below the most recent close. We wait for a stock that is pulling back to move lower intraday, hit our limit order, and begin to move higher.

As subscribers to our TradingMarkets Battle Plan for Stocks service has noticed, sometimes this is all there is to it. We have had numerous stocks that we offer before the market opens end up getting filled shortly after the bell. Some stocks may require a few days to experience the sort of weakness that will trigger out entry. And because most if not all of these stocks are oversold already, many will simply bounce without ever giving us the intraday weakness we are looking for before taking the trade.

That's okay. There are plenty of opportunities and plenty of instances where we get the intraday weakness we want. It requires patience. But our experience suggests strongly that that patience is often quite well rewarded with strong moves and profitable, short term trades.

All four stocks in today's report have Short Term PowerRatings of 8. Our research into short term stock price behavior informs us that stocks with Short Term PowerRatings of 8 have outperformed the average stock by a margin of more than 8 to 1 over the next five days. I have also listed the 2-period Relative Strength Index values for each stock. We consider a 2-period RSI of less than 10 to be oversold, and a 2-period RSI of less than 2 to be severely oversold.

Rick's Caberet International (RICK | news | PowerRating | PR Charts ). RSI(2): 1.53

Warnaco Group (WRNC | news | PowerRating | PR Charts ). RSI(2): 15.80

IDM Pharma (IDMI | news | PowerRating | PR Charts ). RSI(2): 20.14

Multi-Fineline Electronix (MFLX | news | PowerRating | PR Charts ). RSI(2): 2.92

Does your stock trading need a tune-up? Read our special, Free Report, "5 Secrets to Short Term Stock Trading Success" for a refresher course on not just why to buy low and sell high, but specifically how you can use intraday weakness in the market to do so. Click here to get your copy of "5 Secrets to Short Term Stock Trading Success" or call us today at 888-484-8220.

David Penn is Senior Editor at TradingMarkets.com.