Here’s a strategy you can use to catch runaway stocks
One of the great things about
PowerRatings
is that they can be used in so many different ways. Once you
understand the basics, you can combine them with a myriad of trading styles.
Each day I’m going to highlight some of the different ways you can incorporate
PowerRatings
into your existing trading strategies and hopefully teach you a few new ones
along the way. I’ll also show you some of the ways our members are using
PowerRatings
to improve their trading.
In today’s example, let’s take a look Pacific
Ethanol
(
PEIX |
Quote |
Chart |
News |
PowerRating):
PEIX traded in a sideways range since its’ debut
on the NASDAQ in March 2005. That range was recently broken, with the stock
doubling in value since mid-January. With energy prices near historic highs
investors have turned their attention to companies operating in the renewable
fuels sector.
The first person to bring PEIX to my attention
was the leader of the
TradingMarkets/Playboy 2006 Stock Picking Contest – Amy Sue Cooper (2005
Cyber Girl Of The Year). You can read why Amy
selected PEIX
here.
As I mentioned earlier, PEIX has doubled since
January (and more than 77% since Amy selected it!). When a stock has had a
runaway move like this it can be very difficult to pick the right time to enter.
This is where can help
PowerRatings
you. Waiting for a stock to pullback and then register a high
PowerRating
(7-10) will give you a high probability trade that
the next leg up is about to begin.
If you look at the chart below, you’ll see that’s
exactly what happened recently. On 02/17/06 PEIX had a
PowerRating
of 9. In the four days since then PEIX is up over
14% and the current price is adding to those gains.
You should also notice that five days before it
registered a
PowerRating
of 9, PEIX broke out to a new high. If you had bought the breakout you would be
nursing losses, whereas a little patience combined with
PowerRatings
would have rewarded you with a substantial profit.
Click here
to take a free trial of
PowerRatings.
You can also
attend a free
class on how to use
PowerRatings
presented by Steve Primo, our Director of Education.
Ashton Dorkins
Editor-in-Chief