Is the Market Set for a Reversal?
Currently the Dow is sitting near 52-week highs after making a
fantastic recovery from the February 27th selloff. The markets look to be
very strong, but is now the best time to enter?
While the market never clearly tells us where it is headed,
there are a few clues that we can pick out. Here at TradingMarkets our
goal is to help traders like you find an edge in the marketplace. We have
compiled one of the largest research databanks in existence and our research
covers over 8.5 million daily trades from January 1, 1995-September 30, 2006.
Our data concludes that the edge lies in buying short-term weakness and selling
into short-term strength.
Each night we publish PowerRatings lists of stocks rated 9’s
and 10’s (potential buys) and 1’s and 2’s (stocks to avoid). These lists
will increase or decrease as the market moves up and down. With these
contractions and expansions in the number of PowerRatings stocks, we can have a
historically backtested edge in determining short-term market direction.
Currently, there are only 2 stocks that have a PowerRating of
9 or 10. This clearly tells us that after the recent runup, there are very
few buying opportunities left in the market. On the 1’s and 2’s list we
have 19 stocks with a rating of 1 and 83 stocks with a PowerRating
of 2. This tells us that this may not be the best time to enter the market
on the long side.
Let’s take a look at a few stocks from each list.
This is a very quick and easy way to determine
short-term market direction and can also be used to time individual stock
trades. Remember, you should always have an edge before making a trade.
With PowerRatings you can have that edge.
If you would like to attend a free class which covers this
research and strategy further, please
click here
for the calendar of the upcoming online classes. Topics
covered include our latest research on
entries and exits, and
how to use PowerRatings with our new
Preferred Stock List.
For a free PowerRatings trial,
click here. If
you have any questions about PowerRatings or the new Stock Indicators please
feel free to email us or call 213-955-5858 ext 1.
Darren Wong
Associate Editor
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.