Could You Have Seen Today’s Decline Coming?
As of the writing of this article, the S&P 500 is breaking to
new all-time highs. Let’s take a deeper look into the S&P 500 Index with
PowerRatings.
PowerRatings is a simple to use (and powerful)
ranking system that ranks stocks from 1 to 10. Stocks rated 9 and 10 have
outperformed the average stock by 12 to 1 since 1995 and ideally are the stocks
to focus on each day. Stocks rated 1 and 2 on average have lost money, and you
want to know these stocks in order to avoid them.
From the list below, we can see that there are
many more stocks that have low PowerRatings (3 or below) than stocks with high
PowerRatings (8 or higher). This tells us that as the market moves higher and higher, the list of 9’s and
10’s becomes smaller and smaller. Meanwhile the list of 1’s and 2’s grows larger.
Conversely, when the market declines, the list of 1’s and 2’s gets smaller and
the list of 9’s and 10’s grows larger. This happens because you are
statistically more likely to be successful by buying into short-term weakness
and selling into short-term strength. All of our
historically backtested research indicates this, and it is one of our
10 Rules For Successful Investing.
This list can be used on a daily basis to gauge short term
market direction and to figure out where the historical edge lies. From all of
the low PowerRatings stocks showing up, we may be in for a short term move to
the downside.
Each day we publish an S&P 500 PowerRatings list,
which can be found
here.
Here is a partial list of today’s S&P 500 stocks:
Let’s take a look at daily charts from S&P 500
companies with PowerRatings of 7 or higher:
Merck & Co.
(
MRK |
Quote |
Chart |
News |
PowerRating)
CVS Caremark Corp.
(
CVS |
Quote |
Chart |
News |
PowerRating)
Next we will take a look at a few charts of stocks with low
PowerRatings. These should be avoided or if you are a more aggressive
trader you can look at these for potential short positions.
Public Storage
(
PSA |
Quote |
Chart |
News |
PowerRating)
Circuit City Stores
(
CC |
Quote |
Chart |
News |
PowerRating)
If you would like to attend a free class which covers this
research and strategy further, please
click here
for the calendar of the upcoming online classes. Topics
covered include our latest research on
entries and exits, and
how to use PowerRatings with our new
Preferred Stock List.
For a free PowerRatings trial,
click here. If
you have any questions about PowerRatings or the new Stock Indicators please
feel free to email us or call 213-955-5858 ext 1.
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.