A rising market may lift all stocks. But there are still plenty of oversold names in pullback mode. Here are five such stocks—all of which are also less than $10 per share.
Our Short Term PowerRatings provide traders with another tool with which to evaluate stocks. Whether traders use our PowerRatings as a part of their current trading methodology—or are seeking to build a new trading method using PowerRatings to help provide an edge—Short Term PowerRatings are an effective way to focus on those stocks that are most likely to outperform the average stock in the short term.
For example, traders who screen for stocks typically wind up with either too few candidates or too many. But in either case our Short Term PowerRatings, focusing on aspects of volatility, trend, momentum and volume, can help traders further discriminate those stocks which are truly outstanding opportunities from those that are merely okay.
Options traders and CNBC guru Pete Najarian (who we interviewed as part of our Big Saturday Interview series in April) once told me that part of what he does everyday is “sit around and try to come up with reasons why NOT to take trades that his research presents him.” Najarian, a pro’s pro, knows that even when his proprietary systems produce trading candidates, it often pays to give those candidates a second "going over" to make sure that the only trades a trader is spending money on are the best trades possible.
For those who look to use our Short Term PowerRatings apart from another trading method, our biggest concern is that traders look to buy these stocks as they pullback and become oversold. One technique that helps ensure that we are buying low and selling high is to place a buy limit order 2-6% below the previous day’s close. We call this buying on "intraday weakness" and our research suggests that it is a key factor in our trading methods, methods that have achieved more than 70% winner in long trades.
All five stocks in today’s report have Short Term PowerRatings of 8. Our research, involving millions and millions of simulated, short term stock trades between 1995 and 2007, indicates that stocks with Short Term PowerRatings of 8 have outperformed the average stock by a margin of more than 8 to 1 after five days.
I have also included the 2-period Relative Strength Index (RSI) values for each stock. We consider the 2-period RSI to be among the best technical indicators available for the short term stock trader. Stocks with 2-period RSIs of less than 10 are considered oversold, with stocks that have 2-period RSIs of less than 2 being thought of as extremely oversold and often warranting significant attention from traders.
Note that a few stocks bounced a bit on Thursday, bringing their Relative Strength Index values sharply higher relative to their values on Wednesday. Should weakness return to these stocks, it should be reflected in a return to RSIs more in line with Wednesday’s numbers.
Cell Genesys Inc. (CEGE | news | PowerRating | PR Charts ) Short Term PowerRating 8. RSI(2): 53.01 (from 13.10 on Wednesday)
Pier One Imports Inc. (PIR | news | PowerRating | PR Charts ) Short Term PowerRating 8. RSI(2): 4.23
Hawaiian Holdings Inc. (HA | news | PowerRating | PR Charts ) Short Term PowerRating 8. RSI(2): 3.86
Finish Line Inc. (FINL | news | PowerRating | PR Charts ) Short Term PowerRating 8. RSI(2): 3.40
Tenet Healthcare (THC | news | PowerRating | PR Charts ) Short Term PowerRating 8. RSI(2): 16.91 (from 5.66 on Wednesday)
Does your stock trading need a tune-up? Our highest Short Term PowerRatings stocks have outperformed the average stock by a margin of nearly 17 to 1 after five days.
Whether you have a trading strategy of your own that could use a boost or are looking for a way to tell the stocks that will move higher in the short term from the stocks that are more likely to disappoint, our Short Term PowerRatings are based on more than a decade of quantified, backtested simulated stock trades involving millions of stocks between 1995 and 2007. Click the link above or call us at 888-484-8220, extension 1, and start your free trial today!
