Nasdaq Trading Strategies for Swing Traders
It’s been a volatile first few hours of trading on Tuesday as the Dow soars above 100, then drops into the red before bouncing back into the green for a modest gain.
NPS Pharmaceuticals Inc.
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PowerRating) Short Term PowerRating 10. RSI(2): 2.65
Did Monday’s intraday reversal represent a short term bottom? While that is the question that is foremost in the minds of traders, those of us who swing trade by looking for strong stocks on pullback are focused less on the potential for short term bottoms and more on the presence of a high proportion of 9- and 10-rated stocks in our Top 25 PowerRatings stocks.
CVB Financial Corporation
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PowerRating). Short Term PowerRating 10. RSI(2): 4.23
Why so? Anecdotally, I’ve noticed that when the ratio of 9- and 10-rated stocks greatly exceeds that of 8-rated stocks in our Top 25 PowerRatings stocks, markets have had a tendency to bounce. This is because an increasing number of stocks are reaching oversold extremes, and when everyone who wants to sell has sold – as it the case during oversold extremes – the only ones left are those looking to buy (or cover short positions).
Viropharma Inc.
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PowerRating) Short Term PowerRating 9. RSI(2): 0.443
We haven’t necessarily found a statistical edge in these ratios. But in watching the rhythm of the markets, as they swing back and forth from overbought to oversold, this has been a tendency that I’ve spotted on more than a few occasions.
First Financial Corporation of Indiana
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PowerRating) Short Term PowerRating 9. RSI(2): 9.45
Nevertheless, swing traders who use our Short Term PowerRatings do not have to be swayed by these macro-PowerRating considerations. We know that higher Short Term PowerRatings stocks have outperformed the average stock in the short term, and that the highest Short Term PowerRatings stocks have outperformed all stocks. And in the final, trade-or-no-trade analysis, that is virtually all we need to know.
Shenandoah Telecom
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PowerRating) Short Term PowerRating 9. RSI(2): 22.35
Of the five Nasdaq stocks in today’s report, two have Short Term PowerRatings of 10 and three have Short Term PowerRatings of 9. Our research into short term stock price behavior indicates that stocks with Short Term PowerRatings of 9 have outperformed the average stock by a margin of more than 13 to 1 after five days. Stocks with Short Term PowerRatings of 10 – our highest rating – have actually outperformed the average stock after five days by a margin of nearly 17 to 1.
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.
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 Editor in Chief at TradingMarkets.com.