5 Top PowerRatings Pullbacks for Traders: ACXM, DBD, LNN, QRCP, VCI
In the land of the 220-point Dow sell-off, the buyer of weakness is king …
What are strong stocks doing when the broader markets break down to new lows? More often than not, as strong as those strong stocks may be, they are breaking down, as well.
But in the same way that, as George Orwell put it in his classic tale, Animal Farm, some animals are more equal than others, some breakdowns are more worthy than others. While some breakdowns represent the real likelihood of still lower prices to come, other breakdowns — as severe as they may be, more accurately reflect opportunity for traders disciplined enough to wait for it.
It is often very interesting to talk with traders new to the idea of buying weakness. Many of these traders will often become impatient waiting for stocks to move lower — especially if they are waiting for the sort of intraday weakness or what I have called the “pullback after the pullback” that helps traders who buy low and sell high consistently take positions as the lowest possible prices.
Many of these traders will want to take a position, for example, as soon as they see a stock with a Short Term PowerRating of 9 or 10 — rather than waiting for the stock to move lower on the following day, allowing traders to take advantage of that intraday weakness to buy a stock at even more attractive levels than the day before.
These are the traders I think about when the Dow gives up 200-points in a move as telegraphed by the morning’s futures action as a haymaker from a punch-drunk pugilist. So impatient to take positions when the market has only pulled back a little bit, many of these traders suddenly discover the patience of Job when the market gives them the deep pullbacks and shellacks the stocks they were so eager to enter only a day or two ago.
If you want to trade stocks by buying weakness and selling strength — as we do — then making your peace with deep pullbacks is not just something that traders should learn to accept. Instead, such pullbacks should be the stuff of dreams for traders who know that by limiting their trades to strong stocks that are experiencing aggressive — even savage — profit-taking, they will have a good chance of buying bargains that will likely sell at premium prices once the pullback has run its course.
Here are five stocks — all with Short Term PowerRatings of 8 or 9 — that very much fit into this category of strong stocks in pullback mode. Keeping in mind the “high low†principle I wrote about last Friday — the combination of high Short Term PowerRatings and low 2-period RSIs — let’s see what our screens have produced as of the close on Friday, June 20th.
Acxiom Corporation
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ACXM |
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PowerRating) Short Term PowerRating 9. RSI(2): 2.81
Diebold Inc.
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DBD |
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PowerRating) Short Term PowerRating 9. RSI(2): 2.50
Lindsay Corporation
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LNN |
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PowerRating) Short Term PowerRating 9. RSI(2): 5.53
Quest Resource Corporation
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QRCP |
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PowerRating) Short Term PowerRating 9. RSI(2): 8.87
Valassis Communications Inc.
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VCI |
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PowerRating) Short Term PowerRating 9. RSI(2): 5.02
Of the five stocks in today’s report, there is not a bad one in the bunch. Arguably, Quest Resource Corporation is somewhat less attractive with its 2-period RSI of more than 8. But all five stock have Short Term PowerRatings of 9, which our research indicates makes them likely to outperform the average stock by a margin of more than 13 to 1 after five days.
If I had to pick a favorite, either Acxiom Corporation or Diebold would perhaps be the stocks of this group that are most likely to impress traders over the next week. That is based largely on the fact that both ACXM and DBD have extremely low 2-period RSIs of 2.81 and 2.50, respectively. Combined with their 9 PowerRatings, this is truly a “high low” opportunity for traders to keep track of.
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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