Bottom or Breakdown? Swing Trading the Range
A rally in the final hour of trading on Tuesday helped push the Dow industrials and S&P 500 well into positive territory.
It is true that the markets became significantly oversold as of Monday’s close. In fact, I was almost surprised when the now-familiar late-session sell-off began sometime after midday. Stocks may have lower to go, but the oversold levels that were reached on Monday — combined with the fact that the S&P 500 for example had been down seven out of the last nine days going into Tuesday’s trading — made a rally more than likely.
With markets moving higher — albeit modestly — the number of opportunities for swing traders to buy weakness have not increased significantly since yesterday. We still have a very high number of stocks trading below their 200-day moving averages. And we have not seen — as of yet — enough buying to bring large numbers of stocks back up over and above that line in the trading sands.
In fact, we are not especially likely to see that kind of buying for some time and, even then, we would be looking for the first correction after such a buying surge before we would be looking aggressively to take long positions.
As it is, many of our next opportunities are likely to lie in short and inverse funds, which will earn increasingly high Short Term PowerRatings in the event that the markets continue to advance.
Until then, here are three stocks that have appeared in our Top 25 PowerRatings list that might be attractive to swing traders looking to take advantage of the growing sense that stocks might be moving higher in the near term as recently oversold conditions are worked off.
Unifi Inc.
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UFI |
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PowerRating) Short Term PowerRatings 8. RSI(2): 11.14
Thoratec Corporation
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THOR |
Quote |
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PowerRating) Short Term PowerRating 8. RSI(2): 11.09
Standex International Corporation
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SXI |
Quote |
Chart |
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PowerRating) Short Term PowerRating 8. RSI(2): 1.26
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