5 PowerRatings Stocks for the Next 5 Days: USNA, LPHI, CSGS, CRD.B, ALO
Stocks sold off aggressively on the day after Election Day, as markets finally succumbed to days of increasingly overbought conditions.
If you have been paying any attention at all to this column over the past several days, then the widespread sell-off on Wednesday should come as little surprise.
Whether the market merely played out Buy the Rumor, Sell the Fact 101 or simply finally caved after days in which stocks were bid deeper and deeper into overbought territory, the fact of the matter is that what we saw on Wednesday was in some ways a vindication of our approach to focusing on overbought and oversold extremes.
Our study of short term stock behavior over the past decade and a half or more tells us one thing if nothing else: stocks move from having too many buyers to have too many sellers. When stocks are above the 200-day moving average, generally trending higher, we look primarily for situations when there are too many sellers. These are the quality pullbacks that earn the high Short Term PowerRatings of 8, 9, or 10.
When stocks are below the 200-day moving average, generally trending lower, we look mostly for stocks that are overbought with too many buyers. These are the stocks that have the low Short Term PowerRatings of 1 or 2. Conservative traders are best off passing these low-rated stocks by. More aggressive traders can and should consider selling the lowest rated of these stocks short.
I have no idea whether or not we will see follow-through to the downside on Thursday or a bounce higher. Right now, our Top 25 PowerRatings roster has no more short or inverse ETFs — as was persistently the case for days — and instead we have a number of stocks for traders looking to bet on an oversold bounce to put on their watch lists.
Usana Health Services Inc.
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USNA |
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PowerRating) Short Term PowerRating 9. RSI(2): 1.62
Life Partners Holdings Inc.
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LPHI |
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PowerRating) Short Term PowerRating 8. RSI(2): 4.48
CSG Systems International Inc.
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CSGS |
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PowerRating) Short Term PowerRating 8. RSI(2): 6.68
Crawford & Company Class B
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CRD.B |
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PowerRating) Short Term PowerRating 8. RSI(2): 1.91
Alpharma Inc.
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ALO |
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PowerRating) Short Term PowerRating 8. RSI(2): 10.13
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