If you trade or actively invest in stocks using PowerRatings, this is what you saw the day before Sprint Nextel Corp (NYSE: S), reported quarterly earnings on Wednesday.
Shares of Sprint earned “consider avoiding” ratings of 3 out of 10 on Friday, and with buyers pushing the stock deeper into overbought territory, the stock earned a further downgrade to 2 out of 10, just two days later on Tuesday.
The next day, as Sprint reported a billion dollar loss for the quarter, buyers abandoned the stock. Shares of S were trading lower by well over 5% within an hour after the market opened.
Did PowerRatings know that Sprint was going to disappoint investors Wednesday morning? Of course not. What PowerRatings did know – and what traders and active investors using PowerRatings have come to know and trust about PowerRatings – is that when stocks become extremely overbought in the short-term, the likelihood of underperformance over the next few days is statistically significant.
PowerRatings helps you identify markets that have moved too far, too fast to the upside. With a simple rating system from 1-10, PowerRatings removes the guesswork from active investing, giving even the average trader the confidence to trade and invest like a pro.
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David Penn is Editor in Chief of TradingMarkets.com