Guggenheim Spin-Off Oversold According to Two Systems
Guggenheim Spin-Off (NYSE: CSD) is one of this year’s biggest winners with a year-to-date gain of more than 53%. CSD has sold off over the past several days and is now oversold.
CSD is oversold with a PowerRatings of 10 and also meets the rules as a potential buy according to the rules fully detailed in our guidebook, High Probability Trading with Multiple Up & Down Days.
The longer a short-term trend persists, the greater the odds that a reversal is near. CSD has recorded four multiple down days. This condition is met when prices fall in at least three of the past four days. Backtesting shows that buying an ETF with this setup on a 5% pullback the next day has been profitable 85.5% of the time. These trades are closed when the ConnorsRSI closes above 70. The average gain has been 3.42% and the average trade lasted 2.9 days in a back test from January 2006 through the end of June 2013.
This setup has also been profitable with other entries and exit rules. For example, entering on a 4% pullback has been profitable 79.3% of the time with an average gain of 2.13% and an average holding period of 3.4 days.
Another potential buy setup in CSD is shown in the chart below. 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 10 on a 3% pullback the next day and selling five days later has been profitable 75% of the time. The average winner has gained 5.9%. Other entries and exits also show high winning percentages and large average gains.
CSD will start today’s trading with a PowerRatings of 10. It has offered two previous PowerRatings buy signals in the past few months and both proved to be timely entry points.
CSD should be considered a potential buy under $42.89.
All data is as of the end of day on 12/10/2013.