How to Find Pullbacks with PowerRatings

  • January 22, 2007
  • Darren Wong

Today’s

PowerRatings
article is going to focus on combining
TradingMarkets
Pullback From Highs List with PowerRatings. 

Most successful momentum-based traders and money managers like to buy strong
stocks after they pull back. Pullbacks provide great opportunities to enter
during confirmed trends.  TradingMarkets.com uses a proprietary
mathematical model to identify up to 30 (in weak or choppy markets there will be
fewer) of the strongest stocks that have pulled back from recent highs.  To
learn more about how to trade pullbacks successfully,

click here.

Here are a few individual charts of Pullback stocks with PowerRatings of 7 or
higher.

Fuel Tech
(
FTEK |
Quote |
Chart |
News |
PowerRating)

FTEK’s PowerRating is 8.  FTEK has been trending above its 200-day moving
average (not shown) since August of last year, confirming that it is in an
uptrend.  Also, FTEK recently made a new all-time high at $28.11 on
1/16/2007 and is now pulling back.  Look for FTEK to potentially move back
upwards over the next week. 

The9 Limited
(
NCTY |
Quote |
Chart |
News |
PowerRating)

NCTY’s PowerRating is 8.  This Chinese video game company has recently made
new all-time highs at $35.00 and is now pulling back.  With a high
PowerRating and a pullback opportunity, look for NCTY to continue its uptrend.

Clear Channel
(
CCO |
Quote |
Chart |
News |
PowerRating)

CCO’s PowerRating is 7.  CCO has also made a new all-time high set back on
1/11/2007 at $31.14.  It has been trending strongly upwards having traded
above its 200-day moving average for the last 3 months.  Keep this one on a
watch list for a potential entry.

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.



Click here to start a free trial to PowerRatings and find stocks which have
historically outperformed the market.


Attend a free class on how to use

PowerRatings, presented by Steve Primo, our Director of Education.

Darren Wong

Associate Editor

darrenw@tradingmarkets.com






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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.