Short Term Nasdaq Trading Strategies

Nasdaq stocks are moving down for the third day in a row after reaching overbought extremes late last week.

The Nasdaq has been the most impressive market rising up from the mid-July lows. Compared to the Dow industrials and the S&P 500, the Nasdaq is the index that has actually closed above its 200-day moving average more than once over the past week. For all the bullishness in financial stocks over the past few weeks, those stocks have not been able to bring financial-heavy indexes like the S&P 500 as high as the Nasdaq has traveled.

Concur Technologies Inc. (CNQR | Quote | Chart | News | PowerRating) Short Term PowerRating 9. RSI(2): 6.31

This development, of course, means different things to different traders. To most traders, especially breakout traders, now is the time to begin looking for stocks that are "breaking down", that are slipping out of consolidation ranges or moving below support. When markets begin to sell off, breakout traders around the world "start their engines."

Supertex Inc.(SUPX | Quote | Chart | News | PowerRating) Short Term PowerRating 9. RSI(2): 6.54

For those who buy weakness and sell strength, it is time to "start our engines" as well. But while breakout traders are looking for stocks to sell when markets begin to move lower, swing traders who like to buy when the world is rushing to sell, know that it is time to begin buying shares, not looking to get rid of them.

Volterra Semiconductor (VLTR | Quote | Chart | News | PowerRating) Short Term PowerRating 8. RSI(2): 19.95

This is the key difference between our approach to trading and that of many other traders. We, like a great many professionals, know that in the long run, the most high-percentage, high win-rate trades come when stocks are bought when they are cheap and sold when they become expensive – as opposed to buying stocks when they are expensive and hoping to sell them when they become even more expensive.

WD-40 Company (WDFC | Quote | Chart | News | PowerRating) Short Term PowerRating 8. RSI(2): 9.50

This approach has been quantified by analysis of more than a million simulated short term stock trades since 1995. And what we discovered helped validate decades of market wisdom that says, simply, that buying low and selling high works.

Taleo Corporation (TLEO | Quote | Chart | News | PowerRating) Short Term PowerRating 8. RSI(2): 23.34

Of the five stocks in today's report, three have Short Term PowerRatings of 8 and two have Short Term PowerRatings of 9. We found that stocks with Short Term PowerRatings of 8 outperformed the average stock by a margin of more than 8 to 1 after five days.

Stocks with Short Term PowerRatings of 9 fared even better, besting the average stock by a margin of more than 13 to 1.

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 Editor-in-Chief at TradingMarkets.com.