Direxion Energy Bear 3x Shares Demonstrate Potential of PowerRatings
Direxion Energy Bear 3x Shares (NYSE: ERY) ended yesterday oversold with a PowerRatings of 9. Since the beginning of the year, PowerRatings have identified a number of bullish and bearish turning points in this ETF.
ERY shows how PowerRatings can be helpful for short-term traders. PowerRatings is a stock rating system that ranks stocks on a scale of 1-10. Stocks and ETFs with a rating of 3 or below are likely to underperform the broad market over the next week. Stocks and ETFs with ratings above 8 are likely to outperform the broad market over the next week.
A rating of 1, 2 or 3 is not necessarily a sell signal. The rating indicates the stock or ETF is likely to underperform which means there are better buying opportunities for traders to consider. A high rating on its own is not necessarily a buy signal. Testing shows the best time to enter a trade is on additional weakness after the PowerRating moves above 8.
PowerRatings are based on the relative strength or weakness of particular stocks or ETFs. The higher the rating, the greater the one week historical gain has been for stocks and ETFs with that rating. For best results, enter trades on stocks with a PowerRatings of 8 or higher with a limit order 3-7% below the previous day’s closing price. Higher % limit entries have historically shown a greater percentage of winning trades but higher % limit orders also reduce the chance of trade execution.
ERY will start trading with a PowerRatings of 9 today and should be considered a potential buy below $18.05, 3% below yesterday’s close. In the past, buying stocks with a rating of 9 on a 3% pullback the next day and selling five days later has been profitable 75% of the time with an average winner of 4.3%. Other entries and exits also show high winning percentages and large average gains.
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All data is as of the end of day on 4/1/2014.