5 PowerRatings Stocks for the Next 5 Days: PEET, BMI, UIL, SONO, SJM

Stocks responded to three days of gains in the S&P 500 and Dow industrials with a strong pullback on Monday, with both the S&P 500 and Dow 30 down approximately 2%.

The last time the S&P 500 advanced for three days in a row were the three days back in mid-July that led to what is now a month-long advance. In all other instances, it took merely two consecutive up days to bring out profit-takers, who sold every two-day rally in the markets from mid-July until last Friday

Stocks were not extremely overbought before the Monday pullback. But when stocks are already under a great deal of selling pressure and trading below the 200-day moving average, ordinary overbought extremes can be hard to reach. In these situations, sellers have the “trend at their backs” and it is easier to break the will of the buyers and convince them that stock prices are headed lower.

What does this mean for swing traders? Any day when the markets pull back by 2% is a day that is likely to leave behind a number of strong stocks whose owners are taking the opportunity of a market sell-off to take profits of their own.

That said, the number of 10-rated stocks is smaller than in recent days, and the number of 8-rated stocks, relative to 9-rated stocks, has increased. This leads me to suspect that while a 2% sell-off may have created an opportunity for swing traders to buy stocks on weakness (this report will include five such potential opportunities), the better bets may be farther down the road.

J.M. Smucker Company (SJM | Quote | Chart | News | PowerRating) Short Term PowerRating 8. RSI(2): 12.12

Sonosite Inc. (SONO | Quote | Chart | News | PowerRating) Short Term PowerRating 8. RSI(2): 4.43

UIL Holdings (UIL | Quote | Chart | News | PowerRating) Short Term PowerRating 8. RSI(2): 1.51

Badger Meter Inc. (BMI | Quote | Chart | News | PowerRating) Short Term PowerRating 9. RSI(2): 6.11

Peet’s Coffee and Tea (PEET | Quote | Chart | News | PowerRating) Short Term PowerRating 9. RSI(2): 7.10

Stocks with Short Term PowerRatings of 8 have outperformed the average stock by a margin of more than 8 to 1 after five days. Stocks with Short Term PowerRatings of 9 have outperformed the average stock by a margin of more than 13 to 1 after the same time period.

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