Friday’s Four Pack: 4 Bargain Ready Stocks
Stocks are continuing their winning ways in the early session on this final trading day of the week. The International Trade numbers indicated that imports declined and exports increased slightly sending a mixed but mildly bullish signal to the Street. The bulls appear to be in full control of the marketplace. Even bad news is being reinterpreted to contain some optimistic nugget.
Believe it or not, this bullish burst is making it difficult for short-term investors to decide what stocks to focus on. Almost EVERYTHING looks bullish. However, our extensive studies into the inner nature of stock prices since 1995 have proven that stocks are more likely to advance after a pull back than after a run up. In fact we have quantified the results of these studies to the point of creating a highly effective 3 step stock picking system based on the statistically proven principles.
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 fly in the face 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 next 1 day, 2 day and 1 week time frame.
Here are 4 stocks ready to rock over the short-term:
Phh Corp
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PowerRating): PowerRatings 10, RSI (2) 1.38, 5+ down days
Omnicell
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PowerRating): PowerRatings 8, RSI(2) 0.08, 5 + down days
Flowers Foods
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PowerRating): PowerRatings 8, RSI(2) 0.29, 5+ lower lows
Merit Medical
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PowerRating): PowerRatings 8, RSI(2) 0.29, 5+ lower lows
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 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.