Not A Creature Was Stirring, Not Even A Stock: 2 PowerRatings Names For A Quiet Week
Stocks battled valiantly, on the last full trading day of the week yesterday, to maintain their positive rally for the fourth session in a row. The Nasdaq keeps pushing to new yearly highs, while the S&P 500 and DJIA are struggling with breaking into new upside territory. In fact, candlestick analysts will note the infamous Doji formation on the daily DJIA chart. Those who believe in such formations will explain that it indicates a change in trend, meaning the DJIA is heading down soon! While proper testing reveals the dubious nature of such projections, the Candlestickers will fight to the death about accuracy. It’s an interesting thing to keep in mind, regardless.
Per the majority of analysts, we can expect a quiet week during the time period between Christmas and New Years. Volume is generally light but volatility can increase as portfolio managers look to “window dress” their funds for the final chance to make percentage gains before the year closes out. Flat to slightly lower would be my best projection for the final trading week of the year.
However, no one really knows what the future holds, this is why it pays to use a statistically proven method for choosing stocks for short term gains. We have developed a simple to use, easy to learn 3 step method that will allow you to choose those names most likely to outperform regardless of how quiet or explosive the stock market becomes. This article will layout this 3 step system and provide 3 stocks most likely for gains during the potentially quiet final trading day of the year.
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 and the Stock Power Rating is 8 or higher.
The Stock Power Ratings 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 2 stocks that are poised for short term gains:
Infinera Corporation
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Oncothyreon Inc
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