Nasdaq Trading Strategies: 3 Stocks for Swing Traders
The Nasdaq closed above its 200-day moving average for the first time since early June, boosted in large part by optimism toward technology stocks – especially semiconductor stocks.
In the first hour of trading on Tuesday, the Nasdaq has pulled back a bit, as some understandable profit-taking after yesterday’s rally develops. It remains to be seen, however, whether or not this profit-taking will develop into the sort of pullback/buying opportunity that swing traders looking to buy stocks at lower levels will be able to take advantage of.
Although we have not found significant statistical evidence to back it up, we do know that anecdotally many traders become cautious as markets approach their 200-day moving average. We can see evidence of this both in yesterday’s retreat from intraday highs (note that the Nasdaq 100 September futures did not close above their 200-day moving average on Monday, though the Nasdaq 100 Index did) as well as in this morning’s modest move lower.
That said, it is no surprise that many Nasdaq stocks – including those listed here – are not dramatically oversold. When markets have a short term bias to the upside – as the Nasdaq has for the past few weeks – there is a tendency to drag many stocks higher or, at a minimum, to keep them from moving down and selling off aggressively. In some instances, traders are bidding higher shares that have been beaten down. In many other instances, traders are buying back shares sold short at much higher levels.
This means that patience remains the task at hand for swing traders. Stocks like the three here are perhaps best either watch listed or approached with a limit order several percentage points below the most recent close in order to allow the stocks to “come in” and be purchased at even lower levels.
All three stocks in today’s report have Short Term PowerRatings of 8. We found, after looking at millions of simulated stock trades between 1995 and 2007, that stocks with Short Term PowerRatings of 8 have outperformed the average stock by a margin of more than 8 to 1 after five days.
Olympic Steel Inc.
(
ZEUS |
Quote |
Chart |
News |
PowerRating) Short Term PowerRating 8. RSI(2): 9.40
Volterra Semiconductor
(
VLTR |
Quote |
Chart |
News |
PowerRating) Short Term PowerRating 8. RSI(2): 11.22
Nii Holdings Inc.
(
NIHD |
Quote |
Chart |
News |
PowerRating) Short Term PowerRating 8. RSI(2): 11.79
Does your stock trading need a tune-up? Our highest Short Term PowerRatings stocks have outperformed the average stock by a margin of nearly 17 to 1 after five days.
| Click here to start your free, 7-day trial to our Short Term PowerRatings! |
Whether you have a trading strategy of your own that could use a boost or are looking for a way to tell the stocks that will move higher in the short term from the stocks that are more likely to disappoint, our Short Term PowerRatings are based on more than a decade of quantified, backtested simulated stock trades involving millions of stocks between 1995 and 2007. Click the link above or call us at 888-484-8220, extension 1, and start your free trial today.
David Penn is Senior Editor at TradingMarkets.com.