High PowerRating, Low Price: MBLX, UCBH, FNF
Stocks are off to a sluggish start on Thursday, following the steep sell-off from overbought conditions that had been developing for several days.
Our Short Term PowerRatings may not make it possible for short term traders to take every penny in profit from every opportunity we see. It is the case that often stocks or ETFs will continue to advance for a day or two after we believe the time to take profits has passed. And many times we will lock in our gains in a short trade, even if there is a possibility that more gains could be had by holding on to the position longer.
Metabolix Inc.
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PowerRating) Short Term PowerRating 8. RSI(2): 20.30
But part of what makes Short Term PowerRatings work, part of what makes Short Term PowerRatings the kind of tool that short term traders can use consistently, day after day and month after month, is the fact that each day they help us understand where the biggest edges are, how to take advantage of them, and when to step aside as those edges subside.
UCBH Holdings Inc.
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PowerRating) Short Term PowerRating 8. RSI(2): 10.86
So when we see large numbers of short or inverse ETFs begin to disappear from our Top 25 PowerRatings List, or the ranks of overbought, 1-rated stocks begin to dwindle, we know that while markets may indeed continue lower, the edge, that factor that makes the sort of high win-rate trades we look for every day possible, has begun to fade. And because we only want to trade when the edges are both strong and on our side, we let the Short Term PowerRatings – and our exit strategies involving the 5-day moving average for example – by our guide day in and day out.
Fidelity National Finance Inc.
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PowerRating) Short Term PowerRating 8. RSI(2): 8.50
Right now stocks are oversold. This means to us that the time for betting against the market has passed for the time being. Instead, it is a time to lock in profits in short term short positions, and even begin to look at those stocks that have been pulled into corrections by the selling in the broader market. Here, until the markets rally again, is where our best opportunities in the near term are likely to be found.
Three such potential opportunities are included in this report. All three stocks have Short Term PowerRatings of 8, relatively low, 2-period RSI values, and dollar values of less than $20. Keep an eye on them as they continue to pull back. When buyers return to the market – as they always do – these stocks may be among the first to benefit.
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David Penn is Editor in Chief at TradingMarkets.com.