TradingMarkets Monday Stock Movers: NTRI, OZRK, RTEC

Before the markets opened, the index futures were soaring. But a few hours after the bell, stocks have resumed their more familiar negative bias.

There is an old market truism that suggests that when markets are up early during bearish trends, those gains tend not to endure. This certainly seems to be the case on Monday as those willing to sell stocks seem to be in ever-increasing supply even as markets move lower.

The bearish tone of the market is supported by our TradingMarket Indicators, which list relatively few stocks pulling back compared to those stocks that are below their 200-day moving averages, overbought and – in the present case – have been up by 10% or more over the past five days.

This last indicator is one of the key indicators we use – often in combination with Short Term PowerRatings – to help identify some of the best opportunities for either buying oversold stocks on pullback or selling short overbought stocks as they rally. Our research into short term stock price behavior, research involving millions of simulated short term stock trades between 1995 and 2007, indicates that stocks that are trading below their 200-day moving averages and have been higher by 10% or more in five days have actually been lower in one-day, two-day and one-week time frames.

And when combined with low Short Term PowerRatings, these stocks often represent some of the best opportunities for traders looking to wager against stocks that have moved too far too fast to the upside.

Here are three stocks that fit this criterion as of this morning. All three have Short Term PowerRatings of 1 or 2. All also have very high 2-period RSI values of more than 94 which marks them as overbought markets. And, last, all three are trading under their 200-day moving averages.

NutriSystem Inc. (NTRI | Quote | Chart | News | PowerRating) Short Term PowerRating 1. RSI(2): 97.37

Bank of the Ozarks Inc. (OZRK | Quote | Chart | News | PowerRating) Short Term PowerRating 2. RSI(2): 94.62

Rudolph Technologies Inc. (RTEC | Quote | Chart | News | PowerRating) Short Term PowerRating 1. RSI(2): 98.15

Note that stocks with our lowest Short Term PowerRating of 1, based on our research, have underperformed the average stock by a margin of nearly 5 to 1 after five days. This makes 1-rated stocks like NutriSystem Inc. and Rudolph Technologies particularly worth-watching as candidates for short sales.

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.