Swing Trading the Good, the Bad and the Ugly
Stocks began Monday with a strong start and that strength only intensified after midday, leading both the Dow industrials and S&P 500 to gain more than 4% on the day.
All 25 stocks in our Top 25 PowerRatings Stocks have Short Term PowerRatings of 8. That’s the good news.
The bad news is that out of that 25, 15 are stocks that are trading below their 200-day moving averages and thus, not suitable for short term trading to the upside based on our swing trading methodology.
The ugly? The remaining 10 names in our Top 25 PowerRatings stocks are all oversold inverse exchange-traded funds.
Beauty, however, is in the eye of the beholder. And if the beholder is a short term swing trader looking to make money in this bear market, then those 10 inverse funds may be “ugly†but that does not prevent them from being “attractive.â€
Several days ago I wrote about three inverse exchange-traded funds that swing traders might want to consider as stocks remained under pressure. Those three ETFs had huge, one-day returns of more than 18%, after that column appeared.
I want to remain focused on opportunities in stocks — and as soon as quality pullbacks begin to reappear in stocks, be assured that I will point out and underscore those opportunities.
In the meanwhile, however, the potential opportunities in inverse or short ETFs — as well as their leveraged cousins — are such that swing traders should be aware of them. Here are three such leveraged inverse or short ETFs that all swing traders who trade exchange-traded funds — or are considering trading these vehicles — need to know.
ProShares UltraShort S&P 500
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SDS |
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PowerRating) Short Term PowerRating 8. RSI(2): 19.20
ProShares UltraShort QQQQ
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QID |
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PowerRating) Short Term PowerRating 8. RSI(2): 27.00
ProShares UltraShort Technology
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REW |
Quote |
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PowerRating) Short Term PowerRating 8. RSI(2): 19.90
Although their 2-period RSIs are higher than those usually seen with 8-rated stocks, our research indicates that these are indeed oversold levels for exchange-traded funds. Generally speaking, an exchange-traded fund is considered oversold when its 2-period RSI slides below 40.
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.