Swing Trading with PowerRatings: Model Trade of the Week in Melco Crown Entertainment
Conservative swing traders using PowerRatings to find the best stocks to trade every day may have found shares of ^MPEL^ an elusive quarry over the past several weeks. Twice in August the stock has been upgraded to PowerRatings of 9 and both times the stock responded with higher prices immediately.
On August 8th, shares of MPEL were upgraded to PowerRatings of 9, our second highest rating. One day later, the stock was up more than 15%. Three days later, shares of MPEL were closing above their 5-day moving average, up more than 27%. Five days later, MPEL finished up 34% (below).
On August 22nd, MPEL was again upgraded to PowerRatings of 9 after a multiday pullback. And the gains immediately afterwards, while not as colossal as those from earlier in the month, were consistently positive. One day later, shares of MPEL were closing above their 5-day moving averages after a gain of more than 9%. Five days later, MPEL was still trading higher, up more than 5%.
Six days later, MPEL was up over 17%.
Some would argue (rightly) that having daily stock lists with stocks like these is a “high quality problem”. But for conservative traders who use intraday entries to buy stocks AFTER they earn top PowerRatings, instant moves like these can try the patience of even the most disciplined swing trader.
Fortunately, good things do come to those who wait. And conservative traders who stuck by their discipline of waiting for intraday entries were rewarded with a third PowerRatings upgrade to 9 in Melco Crown Entertainment in September. And this time there was follow-through to the downside, making an intraday entry possible.
For more in the strategy of intraday entries, click the following link to read Trading Strategies for Intraday Weakness and Intraday Strength.
Back to Melco’s third PowerRatings upgrade to 9 since August. MPEL earned a PowerRatings upgrade to 9 on September 15th. But even though the stock traded lower the following day – even earning another 9-rating for the session, the fact that the stock didn’t trade below the previous day’s close by a significant amount meant that most swing traders were unable to take a position.
But because of the upgrade to 9 on the 16th, traders had another shot at MPEL – if the stock traded below the close on the 16th by a significant amount on the following day.
MPEL opened at 11.13, more than 3% below the previous days close and traded as low as 11.06. This would have allowed swing traders using intraday entry levels of 4% or less to take a position on the stock at an exceptionally low and exceptionally oversold level (below).
And the time in MPEL would turn out to be brief. By the end of the day on Monday the 19th, the same day the position would have been filled, shares of MPEL rallied to close above their 5-day moving average. Taking profits using this dynamic exit (more on using the 5-day moving average as an exit strategy for swing trading stocks here), would have allowed traders to lock in gains of 6% or more in a single session.
Whether you are an aggressive trader who looks to buy top-rated stocks as soon as they are upgraded or a conservative trader who prefers to use intraday entries to potentially increase gains, PowerRatings are a spin-free guide to the stock market.
By focusing only on the stocks where there are quantified edges – to the upside or downside – swing traders using PowerRatings can save time, save money and trade like a pro. Click the link below to learn more about PowerRatings today – including how to take advantage of our free, 30-day trial.
Scan one number tonight … to Find Stocks on the Move Tomorrow
David Penn is Editor in Chief of TradingMarkets.com