Are You Ready to Rally? Trading the Bounce Higher
Stocks ended the week on a high note on Friday and with Asian stocks moving higher in advance of Monday’s trading in the U.S., some follow-through to the upside to start the trading week in the United States should not be unexpected.
The number of overbought, low-rated Short Term PowerRatings stocks is not large, but its ranks are growing. At the same time — on the high Short Term PowerRating front — a few short or inverse exchange-traded funds like the Proshares UltraShort Consumer Services ETF, SCC
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PowerRating) are starting to appear in our Top 25 PowerRatings list, a roster of the highest rated stocks available for traders.
The unfortunate part is that we are not quite overbought enough for many of the opportunities in inverse/short ETFs to be truly attractive. This situation could change over the next few days if buyers drum up the courage to rally in the face of what continues to be consistently bad news. But for the time being, the market provides us with few edges. Successful, professional trading is all about trading when the edges are present and standing pat when the edges are not. So in that spirit we will continue to stand on the side of success and wait for buyers to push stocks even deeper into overbought territory or for sellers to force the few stocks still above their 200-day moving averages to go on sale.
This is the kind of price action and trader behavior that will increase the number of high Short Term PowerRatings stocks and ETFs. And given the historical performance of stocks with high Short Term PowerRatings relative to the average stock, it is action and behavior worth waiting for.
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