Learn How to Use PowerRatings to Find Short Entries
The most successful money managers have always used contrarian
strategies to take money from the markets. Examples include buying when
the majority are selling, shorting breakouts, buying short-term weakness in an
uptrend. I would like to show you how our
PowerRatings can be used for current market
conditions.
We are sitting near the top of the recent trading range
(S&P
500 1377 – 1407) going back one month. From the recent rise there
must be a lot of positive sentiment from investors, which historically will set
us up for a downward move. Let’s take a look at how we can use
PowerRatings to find potential short positions.
First we will concentrate on stocks with
PowerRatings of 1, 2, or 3. PowerRatings of 1 and 2 have
on average lost money over the next week. A PowerRating of 1 typically
underperformed the S&P 500 by a 5-1 margin. PowerRatings provides an easy and powerful way
to find trading candidates.
Here is a partial list of 1’s and 2’s, for a full
list
click here:
To further filter the above list for potential shorts, we
should consider only the selections under their 200-day
moving average.
Having the price below the 200-day shows major weakness in the stock and
confirms that it is in a downtrend.
Please note that the list of 1’s and 2’s are not
to be used as automatic shorts. There are a wide variety of factors that
may influence the stock price such as company announcements, earnings, etc.
Detailed research should be done before taking any positions. Also, shorting
stocks is not for everyone.
But they can be very useful in certain situations.
I hope that this article will help add to your
trading arsenal.
Find tomorrow’s winning stocks today!
Click Here!
Attend a free class on how to use
PowerRatings, presented by Steve Primo, our Director of Education.
Darren Wong
Associate Editor
Want a free month of PowerRatings?
Send us your PowerRatings
strategy and receive one free month of this exciting trading tool. If you are
already a monthly or annual PowerRatings
subscriber, you will receive an additional three months if we publish your
strategy.
Reminder: We are in no way recommending the purchase or short sale of these
stocks. This article is intended for education purposes only. Trading should be based on your own understanding of market conditions,
price patterns and risk; our information is designed to contribute to your
understanding.