Stocks are trading around breakeven levels an hour after the open.
Our Top 25 PowerRatings Stocks as of Thursday morning are a mixed bag of 8-rated stocks trading below their 200-day moving averages and 7-rated short or inverse ETFs that are just becoming oversold enough to attract our attention. We will continue to keep an eye on this list as our best gauge of where to look in the market for the best opportunities to buy pullbacks and sell bounces.
When the Top 25 PowerRatings Stocks roster yields few attractive trading candidates, I like to turn to the TradingMarkets Stock Market Indicators page to see if there might be other edges that swing traders and short term stock trades can take advantage of.
IPG Photonics Corporation ( IPGP | Quote | Chart | News | PowerRating) Short Term PowerRating 1. RSI(2): 98.68
This set of indicators - 16 in all - are based on much of the same research that Larry Connors first published in his book, How Markets Really Work, and is continued in his latest book, Short Term Trading Strategies That Work. These indicators take many of the most basic assumptions that many traders have about stocks and ETFs - such as buying stocks that are already up by 10% or more or that have experienced significant gap ups - and turn them on their head with quantified data that reveals that many of these assumptions are 180% degrees incorrect.
Rambus Inc. ( RMBS | Quote | Chart | News | PowerRating) Short Term PowerRating 1. RSI(2): 98.64
One of my favorite indicators in this set is the 2-period RSI. This has become an increasingly popular indicator for short term traders (try Googling "2-period RSI") and is one that Larry Connors has been working on since 2004.
With stocks, 2-period RSIs of less than 2 are considered representative of oversold stocks that, when trading above their 200-day moving averages, are potential buying candidates. On the other hand, stocks with 2-period RSIs of more than 98 are overbought and, when trading below their 200-day moving averages, are stocks that short term traders should either avoid or consider selling short.
Click here to read more about how to trade using the 2-period RSI.
Theravance Inc. ( THRX | Quote | Chart | News | PowerRating) Short Term PowerRating 1. RSI(2): 98.08
In addition to having extremely high 2-period RSI values of more than 98, all three stocks in today's report have Short Term PowerRatings of 1. Our research into short term stock price behavior indicates that stocks with Short Term PowerRatings of 1 have underperformed the average stock by a margin of nearly 5 to 1 after five days.
