Nasdaq Trading Strategies for Swing Traders
Stock are bouncing in earnest in the first hour of trading on “Turnaround Tuesday”, as the oversold conditions from yesterday’s historic sell-off stoke buying in a variety of sectors – though particularly in the financial area.
So should swing traders be in a buying mode right now? Or should they be fading this bounce with short sales?
Our approach to swing trading is as straightforward as it has been successful for us over the past few years – including 2008. We want to take what the market gives us rather than trying to fight it. When the market makes stocks cheap, we begin looking for opportunities to buy. When the market makes stocks expensive, we begin looking for opportunities to sell.
If that sounds simple, then you’re right: it is simple. We believe – and our research indicates – that some of the simplest, most straightforward approaches to short term trading are precisely the methods that turn out to be more successful, year after year, year in and year out.
Most importantly, we’ve seen how this approach to trading – only buying stocks that are trading above their 200-day moving averages, only buying stocks when they are oversold and being sure not to “overstay the welcome” by selling those stocks after they have recovered and moved higher – works not just in low volatility markets, but in high volatility markets, such as the ones we have all been dealing with since August 2007, as well.
Given the negativity surrounding financial stocks, it is no surprise that many of the higher quality pullbacks we are seeing in our Top PowerRatings stocks right now are in banks and other financial institutions. While we have faith in our PowerRatings, we do warn traders not to become overexposed to any one sector – particular “hot” areas such as finance and energy. A little goes a long way in volatile markets, so traders are encouraged to avoid overloading their portfolio – even a short term trading portfolio – with stocks from the same sector or industry.
NPS Pharmaeceuticals Inc.
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NPSP |
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PowerRating) Short Term PowerRating 10. RSI(2): 4.20
Bancfirst Corporation
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BANF |
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PowerRating) Short Term PowerRating 9. RSI(2): 6.68
Chemical Financial Corporation
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CHFC |
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PowerRating) Short Term PowerRating 9. RSI(2): 21.39
Northwest Bancorp Inc.
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NWSB |
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PowerRating) Short Term PowerRating 9. RSI(2): 1.04
Transact Technologies Inc.
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TACT |
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PowerRating) Short Term PowerRating 9. RSI(2): 2.64
Of the five stocks noted here in today’s report, four have Short Term PowerRatings of 9 and one has a Short Term PowerRating of 10. Our research into short term stock price behavior since 1995 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. Our highest rated stocks, those with Short Term PowerRatings of 10, have actually bested the average stock by nearly 17 to 1 over the same timeframe.
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.
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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.