5 PowerRatings Stocks for the Next 5 Days: RES, NEU, TECUA, LNN, DRQ
What are the best opportunities for short term stock traders in the market right now? Our 5 PowerRatings Stocks for the Next 5 Days is a great place to start.
When it comes to short term stock trading, we have two rules: buy low and sell high. That is true whether we are betting that a certain stock will move higher over the next few days or betting that a certain stock will move lower over the next few days.
Buying low and selling high is the North Star of short term trading as far as we are concerned. It helps keep us on track, ensuring that we and the stock traders who use our Short Term PowerRatings, are always looking to buy stocks at their lowest possible points, and not chasing stocks higher. It also means selling when stocks are moving higher, in strong demand and likely to be far more expensive than they were just a few days before.
But whatever approach you use to trade stocks in the short term, our Short Term PowerRatings can be helpful as a sort of “final filter” to help separate potentially good trading candidates from those that may actually be more likely to disappoint.
How do our Short Term PowerRatings help traders tell the difference between stocks that are likely to perform and stocks that are not? Our Short Term PowerRatings are based on research involving millions and millions of simulated stock trades between 1995 and 2007. Focusing on characteristics of volume, trend, volatility and momentum, we were able to rate stocks historically on a scale of 1 to 10. We found, for example, that the lowest rated stocks tended to underperform the average stock by a margin of nearly 5 to 1 after five days.
On the other hand, the stocks that received our highest Short Term PowerRating of 10 were very impressive performers. Our research indicated that stocks with ratings of 10 actually outperformed the average stock by a margin of nearly 17 to 1 after five days.
Being able to separate a list of potential trading candidates into those that are more likely to lag the average stock by a nearly 5 to 1 margin from those that are more likely to beat the average stock by a margin of almost 17 to 1 is an edge that most short term stock traders would swiftly come to appreciate. It is precisely the kind of edge that we believe our Short Term PowerRatings provide.
All five stocks in today’s report have Short Term PowerRatings of at least 9, with two stocks having earned our highest rating of 10. 9-rated stocks tend to be more common than 10-rated stocks and while their historical performance is not as overwhelmingly powerful as the stocks with Short Term PowerRatings of 10, 9-rated stocks are still among the most attractive stocks for short term stock traders.
Note also the 2-period Relative Strength Index (RSI) values for each stock, which help traders see just how oversold the various stocks are. We consider a 2-period RSI of less than 10 to be oversold, with RSI(2)s of less than 2 to represent extremely oversold conditions.
RPC Inc. [RES|RES}. Short Term PowerRating 10. RSI(2): 2.36
Newmarket
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NEU |
Quote |
Chart |
News |
PowerRating). Short Term PowerRating 10. RSI(2): 6.41
Tecumseh Products [TECUA||TECUA]. Short Term PowerRating 9. RSI(2): 1.33
Lindsay
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LNN |
Quote |
Chart |
News |
PowerRating). Short Term PowerRating 9. RSI(2): 10.85
DRIL-QUIP
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DRQ |
Quote |
Chart |
News |
PowerRating). Short Term PowerRating 9. RSI(2): 4.42
Does your short term stock trading need a tune-up? Read our special, Free Report, “5 Secrets to Short Term Stock Trading Success” for a refresher course on not just why to buy low and sell high, but specifically how you can use intraday weakness in the market to do so. Click here to get your copy of “5 Secrets to Short Term Stock Trading Success” or call us today at 888-484-8220.
David Penn is Senior Editor at TradingMarkets.com.