5 PowerRatings Stocks for the Next 5 Days: TCBI, SMMX, POOL, ASGN, RKT
Stocks suffered their worst decline ever on a point basis Monday afternoon, as the failure of the House of Representative to pass Wall Street bailout legislation led to widespread selling of stocks.
On Friday, the markets were mildly overbought. We could tell this by the relatively fewer number of top quality pullbacks — the stocks with the highest possible Short Term PowerRatings. What I suggested then was that while there may be stocks that were still oversold after a few days of the market rallying below the 200-day moving average, the fact that stocks were overbought meant that stocks were going to have to reach overbought extremes and then react to those extremes by pulling back and selling off before traders would find the sort of high win-rate trading opportunities that characterize our approach to swing trading.
The worst decline in decades — ever in point terms — has only accelerated a moment that we knew, as swing traders who follow the markets’ rhythm from oversold to overbought and back again, would be soon in coming. While we certainly didn’t expect a decline of this magnitude, it has become clear that it does not take much for a market trading below its 200-day moving average to become overbought, and the combination of an overbought market and trading below the 200-day moving average can be a difficult combination for stocks in the short term.
What’s next for swing traders? Swing traders should be wary of continued declines, particularly insofar as political rhetoric in Washington outpaces solution-making. In this climate, sticking to the stocks with the highest possible Short Term PowerRatings — the stocks with the Short Term PowerRatings of 9 or 10 — that also are the most oversold by virtue of low, less-than-10-at-least, Relative Strength Index values, is the best approach to wading in and taking positions in those stocks that have pulled back, but continue to close above their 200-day moving averages.
Texas Capital Bancshares
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TCBI |
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PowerRating) Short Term PowerRating 9. RSI(2): 5.10
Symyx Technologies Inc.
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SMMX |
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PowerRating) Short Term PowerRating 9. RSI(2): 0.737
Pool Corporation
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POOL |
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PowerRating) Short Term PowerRating 9. RSI(2): 3.94
On Assignment Inc.
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ASGN |
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PowerRating) Short Term PowerRating 9. RSI(2): 0.351
Rock-Tennessee Company
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RKT |
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PowerRating) Short Term PowerRating 9. RSI(2): 2.15
All five of the stocks in today’s report have Short Term PowerRatings of 9. We found that stocks with Short Term PowerRatings of 9 have outperformed the average stock by a margin of more than 13 to 1 after five days.
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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