Friday Rally Created Few Buying Opportunities
According to headlines, traders pushed stock market averages higher on Friday after a better than expected jobs report. The more likely explanation is that the market rebounded after becoming deeply oversold during a multiday selloff. Friday’s action pushed most market averages into neutral territory and most stocks are also rated neutral. Only two stocks in the NASDAQ 100 index are set up as potential with PowerRatings of 8 or higher.
PowerRatings are based on the relative strength or weakness of particular stocks or ETFs. The higher the rating, the greater the one week historical gain has been for stocks and ETFs with that rating. For best results, enter these trades with a limit order 3-7% below the previous day’s closing price. Higher % limit entries have historically shown a greater percentage of winning trades but higher % limit orders also reduce the chance of trade execution.
In the past, buying stocks with a rating of 8 on a 3% pullback the next day and selling five days later has been profitable 71% of the time. The average winner has gained 3.1%. Other entries and exits also show high winning percentages and large average gains.
Marvell Technology (NASDAQ: MRVL) is one of the two stocks. Previous buy signals in this stock have been timely.
Ross Stores (NASDAQ: ROST) is the other NASDAQ 100 with a PowerRating of 8.
Both MRVL and ROST should be considered potential buys on additional weakness.
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All data is as of the end of day on 12/6/2013.