5 PowerRatings Stocks for the Next 5 Days: CHG, DROOY, ASEI, TEVA, SKF
Stocks again finished to the downside, leaving the Dow industrials, Nasdaq Composite and S&P 500 all in oversold territory below the 200-day moving average.
At the highest levels of our Short Term PowerRatings, the stocks and ETFs with Short Term PowerRatings of 9 or 10, I am seeing little change. Energy and precious metals stocks are represented by 9-rated CH Energy Group
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PowerRating), respectively. A third 9-rated stock, which I’ll make part of today’s 5 PowerRatings Stocks for the Next 5 Days report, is business services firm American Science and Engineering Inc.
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From a strategic standpoint, PowerRatings traders are more or less in the same position: waiting for stocks and ETFs to reach the sort of overbought or oversold extremes out of which our sharpest trading edges emerge. There is a bias toward the downside in stocks in general, but that bias is not overwhelming. The SPY, which tracks the S&P 500, has a Short Term PowerRating of 5 — actually a neutral number — as do both the QQQQ which tracks the Nasdaq 100 and the DIA, which tracks the Dow industrials.
This suggests that stocks are more likely to rally — when they do — on their own accord rather than on the wings of an exceptionally oversold broader market. Sticking with the highest Short Term PowerRatings stocks — or the deepest intraday pullbacks — is a trading strategy that makes sense most of the time, but may be especially worth following now.
To round out the five stocks for today, let’s add a pharmaceutical company in Teva Pharmaceuticals
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PowerRating) and a short exchange-traded fund, the ProShares UltraShort Financials ETF
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PowerRating). Both TEVA and SKF have Short Term PowerRatings of 8 and are among the kind of potential opportunities that short term traders of stocks and ETFs should be looking out for as long as markets remain under pressure and oversold.
The pullback in the SKF has been especially interesting. Usually, when we see potential opportunities in short ETFs, they come in bunches. The particular outperformance of the financial stocks, stocks that have clearly been the most beaten down during this bear market is what has caused the pullback in the SKF, which now has a 2-period RSI of less than 22 and has made four consecutive lower lows above the 200-day moving average.
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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