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Stocks typically rally into three-day weekends such as the Memorial Day weekend now behind us. However, profit-taking was how most traders spent the final full trading week of May, with the S&P 500 and Dow industrials both finishing lower for four days in a row.
Continued selling only has created greater opportunities for traders buying stocks on pullback. Looking at some of the high PowerRatings stocks I have underscored in recent columns, I see that most have continued to pull back, especially stocks like Hansen Natural Corporation (HANS | Quote | Chart | News | PowerRating), which closed lower above its 200-day moving average for a sixth consecutive session on Friday. As long as these stocks remain above their 200-day averages and continue to earn PowerRatings of 8 or higher, short term traders should remain focused on these sort of potential opportunities.
Other stocks, 3Par Inc. (PAR | Quote | Chart | News | PowerRating) have rallied above their 5-day moving averages and are no longer worthwhile trading candidates to the long side. Some, like Systemax Inc. (SYX | Quote | Chart | News | PowerRating) have shown exceptional weakness in falling below their 200-day moving average. Traders should look to exit breakdowns like these on bounces (such as rallies above their 5-day moving averages) rather than on weakness.
Here are the stocks that continue to earn high PowerRatings in the short term and, as such, should represent potential opportunities for reversals to the upside over the next few days.
Air Methods Corporation (AIRM | Quote | Chart | News | PowerRating). PowerRating of 9. This stock has closed down for five consecutive trading days above the 200-day moving average. Intraday strength helped boost the stock’s 2-period RSI from less than 6 to more than 19 on Friday.
Blyth Inc. (BTH | Quote | Chart | News | PowerRating). PowerRating of 9. Closing lower for the past four trading days, BTH reached its most oversold levels in more than a month on Friday, earning a 2-period RSI of less than 5.
Sirona Dental Systems (SIRO | Quote | Chart | News | PowerRating) PowerRating of 9. SIRO has closed lower for three consecutive days, making its lowest closing low in more than 12 days. The stock also has a 2-period RSI of less than 6, its lowest level since the stock broke out above its 200-day moving average in early May.
Recall that stocks with PowerRatings of 9 have outperformed the average stock by a margin of more than 9 to 1 after five days in simulated testing from 1995 through 2008.
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.
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