3 Top Stocks for Traders
A look at some of the highest Short Term PowerRating stocks for traders includes a pair of Nasdaq stocks and a silver exchange-traded fund.
It’s hard for traders not to feel giddy with the good news of the week (and I’m referring to the Dow’s 400+ rally on Tuesday, not necessarily the Spitzer resignation!). And if you’ll forgive a pair of dueling clichés, while it is important not to look a gift horse in the mouth, it is no less important to be able to see the forest for the trees.
By this I mean that the broader markets remain under pressure. The Dow industrials, S&P 500 and Nasdaq are all below their 200-day moving averages. As Larry Connors wrote last fall just as the correction was beginning, it is imperative that traders only buy strong stocks when the broader markets are trading below their 200-day moving averages. Buying weak stocks in a time when the broader markets are weak is, over time, a recipe for disaster.
We define strong stocks pretty simply: stocks that are trading above their 200-day moving averages. That’s it, but our research tells us that it is enough. After conducting a study of the S&P 500 from 1989 through 2006, we found that the S&P 500 outperformed in one-day, two-day and one-week timeframes when it was above the 200-day moving average, and underperformed in the same timeframes when it was below the 200-day moving average.
Expanding the study to include the average stock, we looked at more than seven million trades individual stock trades–including now delisted stocks–between 1995 and 2006. The outperformance and underperformance statistics were the same as those with the S&P 500.
Click here to read our research into why the 200-day moving average matters to stock traders.
So when a stock that is trading above its 200-day moving average begins to pullback, that’s when we–and thousands of professional traders all over the world–begin to become interested in it. And while it is not psychologically easy to do, the more the stock pulls back–while remaining above that 200-day moving average–the more interested–and potentially aggressive–we are willing to be.
Here are three of the highest Short Term PowerRatings stocks in the market right now. They include two stocks and one silver ETF. All of the three have Short Term PowerRatings of 8.
iShares Silver Trust
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Rigel Pharmaceuticals
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Meridian Bioscience
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Believe it or not, but the Dow rallying 400+ points is the easy part. The hard part comes in knowing which stocks you should be buying to take advantage of the market’s explosive move higher. Our special Free Report, “5 Secrets to Short Term Stock Trading Success” will help you stay on the right road when it comes to trading the right stocks at the right time. Click here to get your special free report–or call us today at 888-484-8220.
David Penn is Senior Editor at TradingMarkets.com.