Are You a Short-Term Trader Looking for Momentum Stocks?
Each day,
TradingMarkets publishes
7 Trading Ideas for Today, a selection of stocks from our daily indicators. TradingMarkets
Stock Indicators are based upon our latest quantitative research, and
highlight trading edges backed by our database of more than 7-million historical
simulated trades.
Dendreon
(
DNDN |
Quote |
Chart |
News |
PowerRating) has been one of the most popular stocks for momentum traders lately.Â
It has been a candidate several times on our indicator lists and most recently
appeared on both the
Stocks Down 10% or More
and
Gaps Down 5% or More lists last Thursday, May 10. Dendreon
(
DNDN |
Quote |
Chart |
News |
PowerRating)
has also been one of our
Most Requested PowerRatings Stocks over the past month, which are stocks
that our most active PowerRatings traders are looking at.
The Stocks Down 10% or More List are stocks that have lost 10% or more over the past five days and are
trading above their 200-day
moving average. Our research shows that stocks
trading above their 200-day moving average that have lost 10% or more over the
past five days have shown positive returns, on average, 1-day, 2-days and 1-week
later. Historically, these stocks have provided traders with a significant edge.
To learn more about our research into stocks that have that have lost 10% or
more over the past five days, and how to use this information,
click here.
The Gaps Down 5% or More List are stocks that gap down by 5% or more and are trading above their
200-day moving average. Our research shows that stocks trading above their
200-day moving average that gap down by more than 5% have shown positive
returns, on average, 1-day, 2-days and 1-week later. Historically, these stocks
have provided traders with a significant edge. To learn more about our research
into stocks that gap down, and how to use this information,
click here.
The
TradingMarkets mantra is to “buy weakness,” and that is exactly what you could
have done here. Dendreon
(
DNDN |
Quote |
Chart |
News |
PowerRating) encountered extremely oversold
conditions, which was a perfect setup for a classic mean-reverting bounce.
If you had bought Dendreon on
5/10/07 after appearing on both of our indicator lists here are the short term
results:
1-day later, DNDN closed
-3.6%
2-days later, DNDN closed +6.3%
5-days later, DNDN closed
+4.2%
Obviously,
results like these do not occur every time, but
our quantified research clearly shows that the edges exist during extreme
oversold or overbought conditions.
Check out our
latest quantified research articles
here. If
you don’t already have a TradingMarkets subscription,
click here
for a free 7-day trial. Check back daily for more 7 Trading Ideas for Today,
and develop your own watchlist of stocks with historically-backed edges.
Darren Wong
Associate Editor
Reminder: We are in no way recommending the purchase or short sale of
these stocks. This article is intended for education purposes only. Trading
should be based on your own understanding of market conditions, price patterns
and risk; our information is designed to contribute to your understanding.