When the going gets tough, the tough get going--in pursuit of high Short Term PowerRatings stocks.
It is always a good time for traders to stick with high PowerRatings stocks when they are trading. This is true whether traders are using PowerRatings as a "final filter" on their own stock selections or use PowerRatings "straight-no-chaser" style, looking to buy high PowerRatings stocks with a limit order below the stock's previous close. But there are times when focusing on high PowerRatings stocks is not just a matter of preference and right now, with the markets under pressure and on the defensive, is one of those times.
The Friday sell-off does not necessarily shift the momentum from the buyers to the sellers. Arguably, the pullback represents the first attempt by sellers to "push back" since the near 400 point rally in the Dow on April 1st. While it is likely that this pullback will result in just another opportunity to buy quality stocks that are becoming less expensive, it is possible that Friday's selling will lead to further weakness over the balance of the week.
This is why we strongly encourage traders to stick with the highest Short Term PowerRatings stocks when looking to buy pullbacks right now. These stocks, with Short Term PowerRatings of 9 or 10, are the stocks that are both most extended and most likely to outperform when sellers overplay their hand and bring prices to a level at which buyers seems to appear out of nowhere.
Our research, examining millions and millions of short term stock trades between 1995 and 2007, backs up our confidence in high Short Term PowerRatings stocks. We found, for example, that stocks with Short Term PowerRatings of 9 outperfomed the average stock by a margin of more than 13 to 1 over five days. When bought at the right time, this provides a powerful edge for traders in the short term.
We found that stocks with Short Term PowerRatings of 10 fared even better after five days. These stocks, which have the highest possible Short Term PowerRating in our system, have actually outperformed the average stock by a margin of nearly 17 to 1.
When markets are soaring, traders can virtually throw darts at a list of stocks and find a winner. But when markets are anything but perfect, having an edge like Short Term PowerRatings on your side is an invaluable tool for traders who are looking to continue making money when low volatility, trending markets during to high volatility, oscillating or correcting markets.
As I mentioned, all five stocks in today's report have Short Term PowerRatings of 9, making them among the most attractive stocks for short term traders regardless of market conditions. Note the variance in 2-period Relative Strength Index values from stock to stock. We regard any 2-period RSI below 10 as oversold, with reading below 2 being considered extremely oversold.
True Religion Apparel (TRLG | Quote | Chart | News | PowerRating). Short Term PowerRating 9. RSI(2): 1.71
Bruker (BRKR | Quote | Chart | News | PowerRating). Short Term PowerRating 9. RSI(2): 2.67
Axsys Technologies (AXYS | Quote | Chart | News | PowerRating). Short Term PowerRating 9. RSI(2): 10.47
Air Methods (AIRM | Quote | Chart | News | PowerRating). Short Term PowerRating 9. RSI(2): 5.79
Exide Technologies (XIDE | Quote | Chart | News | PowerRating). Short Term PowerRating 9. RSI(2): 9.11
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.
