Nasdaq Trading Strategies: QQQQ, QLD, RGLD, QSII, ALGT
Stocks are off to a positive start on Tuesday following Monday’s mild sell-off.
As we do on Tuesday’s, it’s time to take a look at trading opportunities in the Nasdaq. First, reviewing the big picture, we see a Nasdaq and Nasdaq 100 that are still very overbought. The PowerShares QQQ Trust, QQQQ
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PowerRating), for example, as well as the ProShares Ultra QQQ ETF, QLD
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PowerRating), both have 2-period RSIs that are above 96 as of the Monday close.
This means that trades to the upside in the Nasdaq or its proxies are increasingly risky, insofar as these high 2-period RSI readings are appearing in markets that are still trading below their 200-day moving averages. As such, we would be far more likely to sell short, rather than buy, the Nasdaq at this time.
What about individual Nasdaq stocks? Within the Nasdaq universe of stocks, there are a few stocks that are trading above their 200-day moving averages and have pulled back to become increasingly oversold rather than overbought — as the Nasdaq itself is.
All three stocks in today’s report have Short Term PowerRatings of 8. This means that all three belong to that class of stocks that have historically outperformed the average stock by a margin of more than 8 to 1 after five days. This is based on our analysis of millions of simulated short term stock trades since 1995.
These stocks include Royal Gold Inc.
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PowerRating) with a 2-period RSI of 10.30. This stock has closed below its 5-day moving average for two consecutive days and was seeing some early strength on Tuesday.
Quality Systems Inc.
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PowerRating), which has a 2-period RSI of 5.91, had been down for two days in a row leading into Tuesday trading. The stock opened up sharply lower Tuesday morning. If these lower levels hold, QSII could earn a Short Term PowerRating upgrade by the close of trading.
Last but not least is Allegiant Travel Company
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PowerRating), with the lowest 2-period RSI of the three at 1.94. This stock has closed lower for four days in a row and is moving lower again in the first few hours of trading on Tuesday. This has caused the stock’s RSI to move even lower and, like QSII, potentially earning the stock an upgrade to a higher Short Term PowerRating.
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.