5 Top Nasdaq Stocks for Traders: WRLD, RICK, PFGC, NBTB, MKSI
Two days after the Nasdaq’s 2-period Relative Strength Index revealed the Nasdaq to be overbought, selling has helped cut that RSI in half–and potentially brought out a few opportunities to the long side for traders.
The Nasdaq is still very much under pressure, trading below its 200-day moving average. And while the Nasdaq has begun to make a set of higher lows, it has still to breakout beyond the February highs, a relatively minor hurdle on any track to year-to-date highs. But within the Nasdaq there are stocks that are in relatively strong shape–advancing in healthy uptrends and trading above their 200-day moving averages.
It is when the broader weakness of the Nasdaq drags these stocks down that we become most interested in the new-found weakness of the formerly strong stocks.
Successful short term trading requires both the right stocks at the right time. For us, the right stocks are the stocks that our research has indicated are likely to outperform the average stock by a significant margin over the next five to eight days. These stocks, which appear in our Short Term PowerRatings as the stocks with ratings of 8, 9 or 10, have the kind of historical track record that make them the kind of stocks that traders wan to be trading.
The right time is, of course, as the stocks are pulling back. Actually, there are two types of pullback that we are interested in. The first is the broader pullback that a strong stock will experience as those who own the stock take profits. This is the pullback that tends to lead most directly to an upgrade in the Short Term PowerRating of the stock.
The second pullback is much briefer and occurs as a result of intraday weakness. While there are a variety of ways to use our Short Term PowerRatings, we have found much success in using intraday weakness as an opportunity to take positions in stocks which, according to our research, are likely to outperform the average stock in over the next five days. By putting a limit order anywhere between 1% and 8% below the previous close of a high Short Term PowerRating stock, we are allowing for a last bit of pessimism to help drive a stock down to a level where buyers feel that the prices cannot go any lower.
However you look at it, we are buying weakness at every opportunity. Weakness alerts us to the potential trade. And weakness helps us buy the stock as the lowest level possible.
All five stocks in today’s report have Short Term PowerRatings of 8. This puts all five in that class of stocks which our research indicates is likely to outperform the average stock by a margin of more than 8 to 1 over the next five days. I have also included the 2-period Relative Strength Index so that traders can see just how oversold these five stocks are.
World Acceptance Corporation
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WRLD |
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PowerRating). RSI(2): 12.56
Rick’s Caberet International
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RICK |
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PowerRating). RSI(2): 5.19
Performance Food Group Company
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PFGC |
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PowerRating). RSI(2): 10.57
NBT Bancorp
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NBTB |
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PowerRating). RSI(2): 10.30
MKS Instruments
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MKSI |
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PowerRating). RSI(2): 13.64
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David Penn is Senior Editor at TradingMarkets.com.