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Stocks ended a back and forth session lower on Tuesday as criticism of the administration’s $700 billion bailout plan grew in Washington and around the country.
Yesterday we were left with a market that was more or less in neutral mode with a slight bias to the oversold. Tuesday’s decline officially marks the S&P 500, Dow Industrials and Nasdaq Composite as oversold.
From the point of view of the swing trader, now is the time to begin looking at opportunities to buy stocks that are pulling back. However, we are not interested in just any stock. For one, we are looking only for stocks that are trading above their 200-day moving averages. These are the stocks that our research looking back to 1995 indicates are most likely to respond positively to the resumption of buying power compared to those stocks that are trading below their 200-day moving averages.
Second, and most obviously, we are looking for high Short Term PowerRatings stocks that are pulling back but still trading above their 200-day moving averages. These stocks not only have the edge of trading above their 200-day moving averages, but also stocks in this category have shown a historical capacity to outperform the average stock in the short term.
Our highest Short Term PowerRatings stocks – those with Short Term PowerRatings of 10 – have outperformed the average stock by a margin of nearly 17 to 1 after five days. This is a tremendous potential edge for swing traders working in the 5-8 day timeframe. Stocks that received Short Term PowerRatings of 9 were also excellent performers, besting the average stock by more than a 13 to 1 margin over the same five-day timeframe.
Coldwater Creek Inc. (CWTR | Quote | Chart | News | PowerRating) Short Term PowerRating 9. RSI(2): 3.57
Wet Seal Inc. (WTSLA | Quote | Chart | News | PowerRating) Short Term PowerRating 8. RSI(2): 15.48
Steve Madden Ltd. (SHOO | Quote | Chart | News | PowerRating) Short Term PowerRating 8. RSI(2): 4.81
Children’s Place Retail (PLCE | Quote | Chart | News | PowerRating) Short Term PowerRating 8. RSI(2): 18.34
Group 1 Automotive Inc. (GPI | Quote | Chart | News | PowerRating) Short Term PowerRating 8. RSI(2): 16.34
Most of the stocks in today’s report have Short Term PowerRatings of 8 – which we consider to be a "high" rating. When combined with clear oversold conditions – such as those revealed by a low, 2-period Relative Strength Index (preferably less than 10) – 8-rated stocks can be among those best suited for short term trades when markets – and the stocks within them – go on sale.
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.
| Click here to start your free, 7-day trial to our Short Term PowerRatings! |
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.
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The Connors Group, Inc. ("Company") is not an investment advisory service, nor a registered investment advisor or broker-dealer and does not purport to tell or suggest which securities or currencies customers should buy or sell for themselves. The analysts and employees or affiliates of Company may hold positions in the stocks, currencies or industries discussed here. You understand and acknowledge that there is a very high degree of risk involved in trading securities and/or currencies. The Company, the authors, the publisher, and all affiliates of Company assume no responsibility or liability for your trading and investment results. Factual statements on the Company's website, or in its publications, are made as of the date stated and are subject to change without notice.
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HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING AND MAY NOT BE IMPACTED BY BROKERAGE AND OTHER SLIPPAGE FEES. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.
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