Here’s how to find low priced stocks with an edge
Would You Like To Find Low-Priced Stocks
With An Edge? Here’s How
Trading low-priced stocks is risky. But many traders are attracted
by the large percentage swings that can occur in stocks trading under $10. This article is about
a tactic that can be used to identify low-priced stocks that have a potential
edge. But we can’t emphasize enough that trading these stocks is highly risky
and should only be considered by those who have the ability to handle the
increased volatility and risk.
With that said, let’s take a look at an interesting
PowerRatings setup that
occurred in Axcelis Technologies
(
ACLS |
Quote |
Chart |
News |
PowerRating), a stock that has been trading
between 4.50 and 8.00 since the beginning of the year.
What is interesting is that we not only saw a
PowerRating
of 9 on Monday, Feb 6, but by Tuesday, Feb 7, the PowerRating
went deeper into the green and became
a 10. This is the kind of action that should prompt you to immediately
pull up a chart.
On Tuesday, the day we had the PowerRating of 10, this is the chart you would
have seen:
As you can see, ACLS had been in a 2-week downtrend at the time when we got
our PowerRating of 10.
Of course, this alone, is not enough to formulate a plan. But our perspective is greatly
improved when we look at the big picture. Let’s look at a longer term chart.
Over the past three months ACLS has been trending higher. When
thePowerRating
of 10 had been signaled, the stock was pulling back from that uptrend.
Given this, a trader might then a look at other factors where
there is a basis for buying this pullback. As it happens, ACLS is a
semiconductor stock. And as you might be aware, the Semis have been trending
strongly higher since last October. Also supporting a potential trade was the
short-term rally in the overall market that unfolded on Feb 8 and 9. Here’s what
happened over the next two days after we got our PowerRating
of 10 signal.
Over the next two days ACLS saw a gain of over 27%.
PowerRatings
is a tool that searches through a large database of stocks in order to identify
those that have a potential edge over the next 5 days. Not only do we find high
profile companies such as Microsoft
(
MSFT |
Quote |
Chart |
News |
PowerRating) and Apple
(
AAPL |
Quote |
Chart |
News |
PowerRating), but you
will be able to uncover lesser known low-priced stocks which offer unique
opportunities. Again, you must be mindful of the risk. One way to deal with it
is to track the 9s and 10s that you identify and paper trade them for awhile.
For example, on Feb 7 other low-priced stocks that trigged 9s and 10s include:
(
LPTH |
Quote |
Chart |
News |
PowerRating)
and
(
NICH |
Quote |
Chart |
News |
PowerRating). Study their charts to see what they did and to formulate your
own plan of attack.
Ashton Dorkins
If you have any questions please contact me:
ashtond@tradingmarkets.com
Click Here for a free 7-day trial of
PowerRatings.
New!
Click here to learn how to trade PowerRatings
in a simple, systematic way.