Dow 11,000 & 3 PowerRatings Stocks

Dow 11,000 is as guaranteed as things can get in this business. A pipe dream of crazed bulls just a few short months ago has nearly become a reality. In fact, on the weekly chart, serious technical resistance doesn’t even appear until the 11,500 area.

Now, the question has become will this move take us to all-time highs on the Dow Jones Industrial Average? While there will absolutely be pullbacks on the way of differing magnitudes, all-time highs are in the cards over the next 12-month time frame.

Practically, how can one trade this massive bull move? The same short term stock picking principles are in play regardless of the state of the underlying market. The axiom of buying the selling and selling the buying rings true in all conditions. We have quantified this short term stock picking method into an easy to use, three step system.

The first and most critical step is to only look at stocks trading above their 200-day Simple Moving Average. This assures that a strong, long term up trend is in place, increasing the odds that you are not buying into a falling knife or catching a stock in a death spiral.

The second step is to drill deeper into the list locating stocks that have fallen 5 or more days in a row or experienced 5 plus consecutive lower lows. Yes, you heard me right, fallen 5 or more days in a row. I know this is counter-intuitive of conventional wisdom of buying stocks as they climb higher. However, our studies have clearly proven that stocks are more likely to increase in value after a period of down days than after a period of up days.

The third and final step is a combination of whittling the list down even further by looking for names whose 2-Period RSI (RSI)2 is less than 2 (for additional information on this proven indicator click here) and the Stock PowerRating is 8 or higher.

The Stock PowerRatings are a statistically based tool that is built upon 14 years of studies into the inner nature of stock prices. It ranks stocks on a scale of 1 to 10 with one being the most volatile and least likely for short term gains and 10 proven to be the most probable for gains over the next 5 days. In fact, 10 rated stocks have shown to have a 14.7 to 1 margin of outperforming the average stock in the short term.

The stocks that fulfill each of the above steps have proven in extensive, statistically valid studies to possess solid odds of increasing in value over the 1 day, 2 day and 1 week time frame

Here are 3 highly ranked PowerRatings stocks that fulfill each and every one of the above steps:

^PIR^

PIR chart

^MATK^

^DEL^

Learn more strategies for trading stocks in the short term with a free trial to our PowerRatings! The highest rated stocks have outperformed the average stock by a margin of more than 14.7 to 1 after five days! Click here to launch your free PowerRatings trial today!

The Holy Grail of Indicators – Click here to learn the best trading indicator and why you should avoid the popular 14-period RSI.

David Goodboy is Vice President of Business Development for a New York City based multi-strategy fund.