PowerRatings article looks at the best performing stock from last week:
For anyone unfamiliar with this stock, it also happens to be the best performing
stock selected by
Amy Sue Cooper, leader of the
TradingMarkets/Playboy 2006 Stock Picking Contest. To read about Amy
Sue’s market beating performance,
click here and you can
Amy Sue’s blog
The two charts below show PEIX’s performance this year, and a close-up of
the past week.
The first chart shows PEIX rising from a low of $9.95 on 01/19/06, to a high of
$44.50 on 05/11/06, a 447% return. It then lost 55% in one month, falling to an
initial low of $20.05 on 06/13/06. Despite this deep correction PEIX remained
above its 200-day
which is often used as the dividing line between stocks in an uptrend and those
in a downtrend.
The second chart shows PEIX trading sideways for two weeks, re-testing its
low on 06/28/06. At this time, PEIX had a
PowerRating of 7, suggesting it was likely to outperform the S&P 500 over the
next five days. This retest was accompanied by a positive divergence in the
5-day RSI, another bullish sign.
When a number of indicators align in this manner, they increase the likelihood
of a successful trade. As you can see PEIX, rallied sharply over the next five
days, gaining 23.42%.
From 1995-2005, stocks rated 7 have outperformed the S&P 500 by a better than
4-1 margin over a five-day period. Stocks rated 8 have outperformed the S&P 500
by a better than 8-1 margin; stocks rated 9 have outperformed the S&P 500 by a
13-1 margin, and those stocks that have achieved a 10
outperformed the S&P 500 by a 16.9-1 margin.
Over the same test period (1995-2005), stocks with a PowerRating of 1, 2 or 3 have underperformed the
S&P 500 over the next five-days. The 1′s have performed 4.9 times worse than the
S&P 500, the 2′s have performed worse than the S&P 500, and the 3′s have only
managed 90% of the S&P 500 performance.
Want a free month of PowerRatings?
Send us your PowerRatings
strategy and receive one free month of this exciting trading tool. If you are
already a monthly or annual PowerRatings
subscriber, you will receive an additional three months if we publish your
Reminder: We are in no way recommending the purchase or short sale of these
stocks. This article is intended for education purposes only. Trading should be based on your own understanding of market conditions,
price patterns and risk; our information is designed to contribute to your
understanding. Controlling risk through the use of protective stops is critical.