Did PowerRatings Warn of this 18.9% Decline in SLP?
Today’s
PowerRatings
article looks at the best performing stock for the past five days:
Simulations Plus Inc.
(
SLP |
Quote |
Chart |
News |
PowerRating)
Despite the market making new highs, PowerRatings
is able to help traders filter out which stocks to buy as well as stocks to
avoid. Aggressive traders can use our daily lists of low PowerRatings
stocks to find stocks to short.Â
Let’s review the best performing low rated stock
over the past week and see how we could have entered and exited the position. Point 1 on the chart below shows
the day that SLP received a low PowerRating of 3. Prior to receiving the
low PowerRating, SLP had run up for 5 straight sessions. This indicated
that buying pressure may stall soon. Also, with a PowerRating of 3, SLP was likely to underperform the S&P 500 over
the next five days.
Using intraday PowerRatings you could have entered near the
close on 4/11/07 at a price of $15.75 (first red arrow). The second red
arrow presents another potential entry on the next day’s open at the $15.00
level.Â
One popular exit strategy many traders use is to exit upon a
close beyond the 10-day simple moving average (blue line). The third red
arrow marks an exit point of $12.77. This marks gains between 14.9% and
18.9% depending upon your entry level.Â
These profits were made in 3 or 4 sessions.
PowerRatings performance shows the returns versus
the S&P 500 for the equivalent 5-day hold. The stocks which have had a PowerRating of 8 have outperformed the S&P 500 index on average over the next 5
days by an 5.8-1 margin. Stocks with a PowerRating of 9 have outperformed by a
10.1-1 margin. Stocks with a PowerRating of 10 have outperformed the S&P by
nearly 14.7-1 margin. This potential edge opens up a number of possibilities for
your trading and investing.
One more interesting fact about the
PowerRatings; PowerRatings of 1 and 2 have on average lost money over the next
week. A PowerRating of 1 has underperformed the S&P 500 by a 5-1 margin.
Obviously, you should ideally be looking to be buying high PowerRating stocks
and avoid (or short) low PowerRatings stocks.
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.