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With stocks trading around breakeven levels on the final trading day of the week, a number of high PowerRatings stocks have yet to begin their reversals. This means that there are still some opportunities for short term traders looking to get some long exposure to the market in advance of the weekend.
Friday's breakeven trading mirrors the generally neutral state of stocks right now. Much of this, as Larry Connors has been underscoring in his Trading Lessons of the Day this week, has to with the fact that the markets - especially the S&P 500 and the Dow industrials - are approaching their 200-day moving averages.
And while this means that traders should be a bit more cautious when the markets are approaching their 200-day, it does not mean that traders should avoid entirely short term stock trading. Even if some markets are still making up their minds about rallying above or retreating from the 200-day, there are plenty of stocks that have already figured it out.
Ardea Biosciences (RDEA | Quote | Chart | News | PowerRating) PowerRating of 9.
Shares of Ardea Biosciences have begun rolling over in the past few days, sliding into a sideways consolidation over the past several days. Closing lower for the past four days in a row, RDEA has an intraday 2-period RSI of less than 2 early in trading on Friday.
MercadoLibre (MELI | Quote | Chart | News | PowerRating) PowerRating of 8.
MELI is another stock that is moving higher on Friday but has not yet crossed above its 5-day moving average. Friday's rally comes as the stock moves up out of extremely oversold territory - MELI had two consecutive days with 2-period RSI values of less than 3. Intraday weakness as sellers knock the stock off its intraday highs may help this stock return to oversold conditions above the 200-day.
RightNow Technologies (RNOW | Quote | Chart | News | PowerRating) PowerRating of 8
In a sideways consolidation since breaking out above its 200-day moving average near mid-months, shares of RightNow Technologies have closed lower for three out of the past four days and now have a 2-period RSI of less than 18. As with MELI, additional intraday weakness will likely be key to opportunities in RNOW.
All three stocks in today's report have PowerRatings of 8 or 9. Our research into short term stock behavior indicates that stocks with PowerRatings of 8 have outperformed the average stock by a margin of more than 6 to 1 after five days. Stocks with PowerRatings of 9 have performed even better, besting the average stock by a more than 9 to 1 margin over the same time period.
Does your stock trading need a tune-up? Our highest Short Term PowerRatings stocks have outperformed the average stock by a margin of more than 14 to 1 after five days.
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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 Editor in Chief at TradingMarkets.com.
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