Learn How to Reduce Overnight Risk
Today’s
PowerRatings article will focus on TradingMarkets Rule 7 – Reduce
Overnight Risk (More); If You Buy Stocks, Buy Better Established Companies
This basically ties
into the same philosophy as Rule 6, which is to try to minimize overnight risk.
Overnight gaps in equities occur all the time. But they tend to occur more in
less established companies, especially those in the technology industry.
Therefore in order to lessen overnight risk, look to trade the better, more
established blue chip companies, especially those found in the S&P 500. For
those of you who are willing to assume a bit more risk, you can expand your
universe to the NASDAQ 100 companies.
Each day we publish a S&P 500 PowerRatings list,
which can be found
here. Here is a partial list of today’s top PowerRated S&P 500 stocks:
Let’s take a look at charts from S&P 500
companies with PowerRatings of 7 or higher:
Goodyear Tire & Rubber
(
GT |
Quote |
Chart |
News |
PowerRating)
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Cisco Systems
(
CSCO |
Quote |
Chart |
News |
PowerRating)
Â
NVIDIA Corp.
(
NVDA |
Quote |
Chart |
News |
PowerRating)
Â
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!
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PowerRatings, presented by Steve Primo, our Director of Education.
Darren Wong
Associate Editor
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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.