Even though the markets were broadly higher on Thursday, there are still a number of stocks in pull back mode. And among these stocks are our 5 PowerRatings Stocks for the Next 5 Days.
All five of the stocks in this report, based on their Short Term PowerRatings, are stocks that our research indicates are likely to outperform the average stock over the next five days.
Many times traders see the stocks in our PowerRatings lists and can’t wait to put their money on the table. Given the results of our historical backtesting, this is an understandable response. The stocks that receive the highest Short Term PowerRatings, those stocks that earn a rating of "10", have outperformed the average stock by a margin of nearly 17 to 1 after five days. Even stocks with slightly lower Short Term PowerRatings, PowerRatings that are still in the "consider buying" range of 8-10, have historically proven in our testing to be superior short term bets compared to the average stock.
So if buying these stocks as soon as they appear is not the best way to trade them, what is?
There are many approaches to trading our Short Term PowerRatings. We like to wait for stocks to gain a Short Term PowerRating of 8 for the first time — 9 or 10 is even better. Then we look to buy these stocks by putting a limit order anywhere from 2% to as much as 6% below the previous day’s close.
In a sense, we are looking for two pullbacks: the initial pull back that often takes a stock’s Short Term PowerRating from an average rating to an 8 or, again, even better a 8 or 10. And the subsequent intraday pullback – what we call "intraday weakness" – that fills our limit order below the previous day’s close.
Why this approach? For one, our historical testing and many of the successful trading methods we use every day are based on this approach to targeting pull backs and buying on intraday weakness (and the weaker the better). For two, this approach helps ensure that we are buying stocks at their lowest points possible.
One of the more agonizing regular events for breakout traders is to buy a stock on a breakout only to have that stock come plunging back to the breakout level. Some stocks recover and resume their breakout. Other stocks do not. Some stocks do resume their breakouts – but only after many traders have given up and decided to cut their losses.
Our approach to short term trading avoid this frustration. By buying stocks that are already pulling back, and then again waiting for further weakness intraday, we maximize the likelihood of buying low today – the best way, in our opinion, to position yourself for selling high tomorrow.
All stocks in today’s report have Short Term PowerRatings of 8 or 9. Our research into short term stock price behavior between 1995 and 2007 indicated that stocks with Short Term PowerRatings of 8 or higher significantly outperformed the average stock after five days.
Specifically, stocks with Short Term PowerRatings of 8 outperformed the average stock by more than 8 to 1 after five days. Stocks with Short Term PowerRatings of 9 fared even better, beating the average stock by a 13.5 to 1 margin over the same short term time frame.
Cryptologic Ltd. (CRYP | Quote | Chart | News | PowerRating) Short Term PowerRating 9. RSI(2): 8.68
Rait Financial Trust (RAS | Quote | Chart | News | PowerRating) Short Term PowerRating 8. RSI(2): 22.40
Netflix Inc. (NFLX | Quote | Chart | News | PowerRating) Short Term PowerRating 8. RSI(2): 5.41
Morningstar Inc. (MORN | Quote | Chart | News | PowerRating) Short Term PowerRating 8. RSI(2): 11.35
Mastercard (MA | Quote | Chart | News | PowerRating) Short Term PowerRating 8. RSI(2): 30.62
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.
