Monday Stock Movers: 5 Stocks for Swing Traders
Stocks are off to a selling start, with the Dow down nearly 300 points less than half an hour after the opening bell on Monday.
The markets were in a mildly overbought condition as trading ended last Friday. And while this set the stage for a reversal to the downside, traders could have been forgiven for anticipating at least some additional upside in the first few days of the week.
We find it worthwhile to begin watching markets when they become overbought below the 200-day moving average. But because short squeezes can drag even the worst stocks higher for a period of time, we tend to like to wait for a market or stock to truly show its overbought character for a few days before determining that the market or stock in question is dangerously overbought and likely to move lower.
What does this mean for swing traders who buy weakness and sell into strength? For one, it looks like there will be plenty of weakness to buy over the next few days — sooner than might have been expected given the newly-overbought conditions in the market at the end of last week.
As such, traders’ time is best spent right now compiling watch lists of those stocks that are making the deepest pullbacks, gapping down, or losing 10% or more in a short period of time. These are the stocks that our research into short term stock price behavior indicates will respond the most powerfully when buying pressure begins to re-enter the market. All five of the stocks in this report fall into that later category of stocks that have lost 10% or more in the past five days, a condition we have found that leads to positive performance in one-day, two-day and one-week timeframes.
Jo-Ann Stores
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JAS |
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PowerRating) Short Term PowerRating 8. RSI(2): 1.61
Netlogic Microsystems
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NETL |
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PowerRating) Short Term PowerRating 8. RSI(2): 6.46
Old National Bancorp Inc.
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ONB |
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PowerRating) Short Term PowerRating 8. RSI(2): 40.05
Symyx Technologies Inc.
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SMMX |
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PowerRating) Short Term PowerRating 8. RSI(2): 4.60
Trustmark Corporation
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TRMK |
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PowerRating) Short Term PowerRating 8. RSI(2): 13.43
Additionally, all five stocks in today’s report have Short Term PowerRatings of 8. Our research, examining millions of simulated short term stock trades between 1995 and 2007 indicates that stocks with Short Term PowerRatings of 8 have outperformed the average stock by a margin of more than 8 to 1 after five days.
Does your stock trading need a tune-up? Our highest Short Term PowerRatings stocks have outperformed the average stock by a margin of nearly 17 to 1 after five days.
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Whether you have a trading strategy of your own that could use a boost or are looking for a way to tell the stocks that will move higher in the short term from the stocks that are more likely to disappoint, our Short Term PowerRatings are based on more than a decade of quantified, backtested simulated stock trades involving millions of stocks between 1995 and 2007. Click the link above or call us at 888-484-8220, extension 1, and start your free trial today.
David Penn is Editor in Chief at TradingMarkets.com.