Nasdaq Trading Strategies: 3 Stocks for Swing Traders
Stocks are in full speed retreat in the first few hours of trading as yesterday’s selling follows through into Tuesday.
The Nasdaq is more oversold than either the Dow or S&P 500 as of Tuesday morning. This suggests that these smaller stocks — as well as those in technology — are increasingly under pressure. Should this morning’s selling continue for the balance of the day, then the Nasdaq will have been down for three out of the past four days.
Integral Systems Inc.
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PowerRating) Short Term PowerRating 8. RSI(2): 2.41
Even below the 200-day moving average, this sort of selling will quickly create conditions that are oversold enough to bring buyers back to the market. As the Nasdaq shifts from being a swing trading market to a momentum market – the first characterized by selling strength and the second marked by a willingness to sell weakness – we move closer and closer to the moment when selling will exhaust itself, short covering begin, and the Nasdaq and its stocks move higher.
NCI Inc.
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PowerRating) Short Term PowerRating 8. RSI(2): 18.58
There are a few stocks in the Nasdaq still trading above their 200-day moving averages, that have made quality pullbacks in recent days. Three of those stocks are presented here.
First Financial Corporation of Indiana
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PowerRating) Short Term PowerRating 8. RSI(2): 4.42
However, given the power of momentum markets over the past few months, traders would be well-advised to keep their position sizes modest on any long stock trades. We are in an era of exceptional single stock risk and one of the best ways to protect a portfolio from the potentially disproportionate impact of any one stock is to keep position sizes manageable and not to risk too much in any one position.
All three stocks in today’s report have Short Term PowerRatings of 8. Our research into short term stock price behavior since 1995 indicates 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.
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David Penn is Editor in Chief at TradingMarkets.com.