TradingMarkets Monday Stock Movers

Stocks are under pressure one hour into trading on Monday, with the smaller stocks of the Nasdaq leading the market lower.

We last left the markets on Friday in a relatively neutral mode, with two days of selling in the S&P 500 and Dow industrials helping relieve increasingly overbought conditions. In this, today's selling so far represents a follow-through on the profit-taking that ended last week. And in the same way that buyers of financial stocks lifted the market during its bounce, sellers of those same stocks over the past few days have helped drive the market as a whole lower.

Abiomed Inc. (ABMD | Quote | Chart | News | PowerRating) Short Term PowerRating 8. RSI(2): 12.06

How should traders deal with these market conditions? Continued selling will help create oversold conditions in the broader market, which should be reflected in further pullbacks in those stocks that have already been moving lower – as well as the beginning of profit-taking in those strong stocks that are trading above their 200-day moving averages.

Exactech Inc. (EXAC | Quote | Chart | News | PowerRating) Short Term PowerRating 8. RSI(2): 0.779

This means that many of the opportunities available in the near term will likely not be optimal. Reviewing stocks last night I noticed again a relatively few number of the highest rated stocks, those with Short Term PowerRatings of 10 which, according to our research, have outperformed the average stock by a margin of nearly 17 to 1 after five days.

Rent-A-Center Inc. (RCII | Quote | Chart | News | PowerRating) Short Term PowerRating 8. RSI(2): 24.68

This in an of itself has proven to be a good reason to keep one's powder dry and instead wait until stocks move to truly "bargain" levels at which – to steal a classic line from trader Tom DeMark – the "last dumb seller" has finally given up.

More aggressive traders may want to consider the stock's in today's report. In addition to all three stocks being lower by 10% or more over the past five days – one of our primary indicators for oversold conditions - all three of the stocks in today's report have Short Term PowerRatings of 8. Our research into short term stock price behavior since 1995 indicates that stocks with Short Term PowerRatings of 8 have outperformed the average stock by a margin of more than 8 to 1 after five days.

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.