Nasdaq Trading Strategies for Swing Traders: IXYS, QSII, SKIL, SMTS, THFF
The Nasdaq finished down for the week, but off the weekly lows, as buyers stepped in on both Thursday and Friday.
As a result, the Nasdaq is now an overbought market. And because it is trading below its 200-day moving average, our research indicates that the Nasdaq as a whole is a market to be avoided — if not wagered against.
Friday marked the first day of the Nasdaq Composite being overbought based on our indicators. This means that there is still plenty of potential for the Nasdaq to move higher before becoming extremely overbought and vulnerable to reversal.
That said, we have noticed that when markets are under pressure and trading below their 200-day moving averages, it does not take a great deal of buying to turn oversold markets into overbought ones. We have also noticed that markets do not often reach overbought extremes when they are under heavy selling pressure (i.e., trading below their 200-day moving averages) generally speaking. This means that as soon as markets that are trading below their 200-day moving averages become overbought, they are vulnerable to reversal to the downside and traders should be wary.
For swing traders looking at the actual stocks inside the Nasdaq, there remain a higher proportion of 8-rated stocks in our Top 25 relative to 9-rated stocks. On balance, this suggests that stocks need to come in further before we will see a large number of high quality pullbacks and high Short Term PowerRatings.
Traders who want to be more aggressive and trade some of the 8-rated stocks that have become oversold may want to keep an eye on the five provided here. As always, look for intraday weakness below the previous close to help take positions as low as possible in the stocks as they pull back. In addition to sticking with stocks with high Short Term PowerRatings of 8, 9 or 10 and low 2-period RSIs, this practice of taking positions 2, 4 or even 6% below the previous close is one that can help traders get a significant edge in trades that may only last a few days.
IXYS Corporation
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IXYS |
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PowerRating) Short Term PowerRatings 9. RSI(2): 5.07
Quality Systems Inc.
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QSII |
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Chart |
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PowerRating) Short Term PowerRating 8. RSI(2): 12.98
Skillsoft PLC ADR
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SKIL |
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PowerRating) Short Term PowerRating 8. RSI(2): 12.27
Somanetics Corporation
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SMTS |
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Chart |
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PowerRating) Short Term PowerRating 8. RSI(2): 17.47
First Financial Corporation Inc.
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THFF |
Quote |
Chart |
News |
PowerRating) Short Term PowerRating 8. RSI(2): 16.39
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