PowerRatings Five Day Gainers
Positive performance reports from retailers counteracted a dismal trade balance figure this morning. Interestingly, looking behind the curtain, the positive retail reports were driven by cost cutting, not actual sales increases. For example, same store sales fell hard at Abercrombie & Fitch while earnings beat estimates triggering aggressive buying regardless of the true underlying cause.
This cost cutting to bolster performance can only last so long. In my opinion it’s truly a smoke and mirror show, but regardless, the bull market continues in a big way. As active traders, we can not be too concerned about the underlying fundamental whys of a move. Our focus needs to be locating stocks that are primed to move prior to our committing capital. The underlying conditions really don’t matter for the short-term.
How do you go about finding stocks ready to move higher in the short-term? Well, the cardinal rule is to only buy stocks that are trading above their 200-day Simple Moving Average. This simple fact prevents you from buying into a stock that is likely to continue its downward trend. The next rule is only buy stocks on pullbacks not breakouts. I know this contradicts common sense; however our extensive studies have proven that stocks that have fallen 5 or more days in a row, yet remain above their 200-day SMA increase the odds of short-term gain dramatically.
The next important characteristic the stock needs to possess prior to being considered is the 2-period Relative Strength Index must be below 2. (for additional information on this proven indicator click here) This assures that the company is solidly oversold and attractive to bargain hunters and professional money. Finally, you need to look at the PowerRatings. 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
Stocks that fit each of the above criteria have been proven to outperform their brethren by a statistically valid margin in the 1 day, 2 day and 5 day time frames.
Here are 5 names fitting the criteria for your consideration:
Endologix
(
ELGX |
Quote |
Chart |
News |
PowerRating)
Multi-Fineline Electronix
(
MFLX |
Quote |
Chart |
News |
PowerRating)
Sunrise Senior Living
(
SRZ |
Quote |
Chart |
News |
PowerRating)
Wonder Auto Tech
(
WATG |
Quote |
Chart |
News |
PowerRating)
Valassis Communications
(
VCI |
Quote |
Chart |
News |
PowerRating)
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!
David Goodboy is Vice President of Business Development for a New York City based multi-strategy fund.