Monday Stock Movers

With stocks flirting with official bear market territory in the first hour of trading on Monday, we find more than a few stocks that traders looking to buy pullbacks might want to keep an eye on during this holiday-shortened trading week.

Every Monday we take a look at stocks that are making big moves. In particular, we are looking for those stocks that have moved up or down by 10% in the past few days. Why? Because our research into short-term stock price behavior, research that involved millions of simulated short term trades between 1995 and 2007, indicates that stocks that make big moves in a short period of time often represent compelling trading opportunities - though not always in the direction you might expect.

We found, for example, that stocks that are trading above their 200-day moving averages AND have fallen by 10% or more over the past five days have actually outperformed the average stock to the upside in one-day, two-day and one-week timeframes. While the rest of the trading world is looking to bet against stocks that have already fallen significantly, traders who use our approach to buying low and selling high know that the historical edge is in buying, not selling, these beaten down stocks.

Let's take a look at some of these names, stocks that are trading above their 200-day moving averages, but have come under some strong - or even severe - profit-taking over the past few days.

American Semiconductor (AMSC | Quote | Chart | News | PowerRating) Short Term PowerRating 10. RSI(2): 2.24

American Semiconductor's Short Term PowerRating of 10 has been flashing in the eyes of traders for the past two weeks, as the stock continues its pullback late in June. The stock closed above $44 late in the first half of the month, driving the AMSC's 2-period RSI into overbought territory and downgrading the stock's Short Term PowerRating to its lowest level. AMSC has been in correction mode ever since.

Canadian Solar (CSIQ | Quote | Chart | News | PowerRating) Short Term PowerRating 9. RSI(2): 3.31

Twice in the past few months Canadian Solar has had a Short Term PowerRatings downgrade to our lowest level of 1. And both times it accurately anticipated a significant pullback and buying opportunity in the stock. The first was in the second half of May - as the PowerRatings chart shows - and the second appears to be unfolding as I write, with CSIQ having pulled back from the low 50s to the high 30s.

Calgon Carbon Corporation (CCC | Quote | Chart | News | PowerRating) Short Term PowerRating 9. RSI(2): 0.212

In many ways, the PowerRatings chart of Calgon Carbon resembles that of Canadian Solar. Both stocks had major Short Term PowerRatings downgrades to our lowest level and both stocks pulled back significantly after doing so, creating bargain prices for stocks that were much higher only a few days ago. The current pullback in CCC has the stock down from just under $20 at mid-month to just over $15 at month's end.

Methanex Corporation (MEOH | Quote | Chart | News | PowerRating) Short Term PowerRating 8. RSI(2): 5.47

Beware of sudden price spikes with Short Term PowerRatings! That's the message of Methanex and its PowerRatings chart in the second half of June. The stock was moving higher gradually through the end of May and into June, traveling through an upwardly tilted trading range. But a price spike that sent shares of MEOH soaring on June 17th turned out to be short-lived as the stock pulled back almost immediately. MEOH is now trading near its 200-day moving average, having slipped from just shy of $32 to just north of $27.

Sun Hydraulics Inc. (SNHY | Quote | Chart | News | PowerRating) Short Term PowerRating 9. RSI(2): 5.50

Last but not least, we have Sun Hydraulics. This stock had been trading in a fairly sizable range between $35 and $40 for most of May and June. SNHY began moving to the lower end of that range late in the first half of June, and over the past few days has fallen completely out of it, moving as low as $32. Now at its 200-day moving average, the stock has experienced an upgrade to its Short term PowerRating from 8 to 9 just since the last trading session.

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.

David Penn is Senior Editor at TradingMarkets.com.