Doctor, Doctor! Three Drug Stocks for Swing Traders
Stocks finished Monday moderately lower, though the Nasdaq was off by more than 2%. The generally lighter volume during the session was attributed to the Federal Reserve Board’s interest rate announcement pending Tuesday afternoon at 2:15 p.m.
That, and the fact that the market was not providing very much in the way of edges going into the first trading day of the week. Stocks were neither extremely overbought nor extremely oversold — and our Short Term PowerRatings were relatively agnostic on the prospects for a strong move higher or lower on the day. This, as much as anything, is a recipe for a slow market.
How can swing traders prepare themselves for the balance of the week? In a week that features a Fed announcement near the beginning and a quadruple witching expiration day at the end, traders should be prepared for sound and fury signifying very little. For all the talk of bottoms and breakouts (and breakdowns, for that matter), stocks have been reluctant to move too aggressively in any one direction for long. Overbought markets are met with armies of sellers ready to unload shares at the slightest sign of overvaluation. Oversold markets continue to be seen as “bottom picking†opportunities for those who believe in the likelihood of stocks heading higher between now and the spring.
So where does that leave us? We will take both sides of this trade. When markets are overbought and Short Term PowerRatings in stocks are low, we will turn in all likelihood to those short and inverse ETFs that will simultaneously be earning PowerRatings increases for our short term trades. And when markets are oversold and Short Term PowerRatings in stocks are high, then we will look for those most oversold opportunities above the 200-day moving average — be they in stocks or ETFs — for the edges that will help make our short term trading more successful and profitable.
Short of that, we wait. I have listed a few stocks below — all part of the health care sector – that are becoming increasingly attractive as potential trades to the long side. As I have said before, the fact that all three stocks have Short Term PowerRatings of 8 suggests that traders may want to wait, at a minimum, for these stocks to show additional weakness before they are likely to live up to their high Short Term PowerRating potential.
Salix Pharmaceuticals
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SLXP |
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PowerRating) Short Term PowerRating 8. RSI(2): 18.25
NPS Pharmaceuticals
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NPSP |
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PowerRating) Short Term PowerRating 8. RSI(2): 6.76
Questcor Pharmaceuticals
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QCOR |
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PowerRating) Short Term PowerRating 8. RSI(2): 1.28