Time your entries better by focusing on pullbacks

  • August 21, 2006
  • Darren Wong

Today’s

PowerRatings article is going to focus on combining

TradingMarkets Pullback List with PowerRatings. 

Most successful momentum-based traders and money managers like to buy strong
stocks after they pull back. Pullbacks provide great opportunities to enter
during confirmed trends.  TradingMarkets.com uses a proprietary
mathematical model to identify up to 30 (in weak or choppy markets there will be
fewer) of the strongest stocks that have pulled back from recent highs.  To
learn more about how to trade pullbacks successfully,

click here.

Here is a partial list of Pullback Stocks:



 

Looking at the top 10 candidates for 08/18/06, 3 out of the 10 qualify for a PowerRating of 7 (or higher).

Genco Shipping & Trading Ltd.
(
GSTL |
Quote |
Chart |
News |
PowerRating)

Echostar Communications
(
DISH |
Quote |
Chart |
News |
PowerRating)

Plains Exploration
(
PXP |
Quote |
Chart |
News |
PowerRating)

From 1995-2005, stocks rated 7 have
outperformed the S&P 500 by a better than 4-1 margin over a five-day period.
Stocks rated 8 have outperformed the S&P 500 by a better than 8-1 margin; stocks
rated 9 have outperformed the S&P 500 by a 13-1 margin, and those stocks that
have achieved a 10 PowerRating have outperformed the S&P
500 by a 16.9-1 margin.

Over the same test period (1995-2005), stocks with a PowerRating of 1, 2 or 3
have underperformed the S&P 500 over the next five-days. The 1’s have performed
4.9 times worse than the S&P 500, the 2’s have performed worse than the S&P 500,
and the 3’s have only managed 90% of the S&P 500 performance.

Reminder: We are in no way recommending the purchase or short sale of these
stocks. Trading should be based on your own understanding of market conditions,
price patterns and risk; our information is designed to contribute to your
understanding. Controlling risk through the use of protective stops is critical.

You can attend
a free class on how to use

PowerRatings, presented by Steve Primo, our Director of Education.

Click here to
try

PowerRatings for yourself, risk free.

Darren Wong

Associate Editor

darrenw@tradingmarkets.com

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