How to Improve Your Edge
There’s a well known
saying that the trend is your friend. And this saying is very true. The market
behaves better above its 200-day
moving average than below it. And the average
gain of the market is far greater when prices have been above the 200-day moving
average than when it has been below it.
Click here for detailed research on the 200-day moving average by Ashton
Dorkins and Larry Connors.
This rule is not
fool-proof. Many good value stocks represent real value below the 200-day MA.
But as a whole, without adding any other filters, it’s easier to make money when
buying the market and stocks when the trend is up, not down.
A good place to start your search for uptrending
stocks would be from our
PowerRatings 9’s and 10’s list. These are the stocks with the highest
historically backtested edge to outperform the S&P 500 over the next 5-8 trading
sessions. They should be placed on a watch list and monitored daily.Â
Here are a few selections from our list of stocks rated a 9 or 10:
InPhonic Inc.
(
INPC |
Quote |
Chart |
News |
PowerRating)
InterMune Inc.
(
ITMN |
Quote |
Chart |
News |
PowerRating)
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.
PowerRatings provides an easy and powerful way
to find trading candidates.
Find tomorrow’s winning stocks today!
Click Here!
Attend a free class on how to use
PowerRatings, presented by Steve Primo, our Director of Education.
Darren Wong
Associate Editor
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strategy.
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.
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