No Pain, No Gain: 5 Stocks for This Week
The final trading day of last week brought the pain to the stock market bulls. Although stocks rallied hard off their lows by the end of the day, Friday’s session stabbed more than a few happy go lucky bulls in the heart. As we anticipate this week, with the futures selling off hard, it’s important to keep in mind that markets never go straight up. They always move in a series of thrusts and counter thrusts as bulls and bears battle for dominance. It is these very swings that traders use to profit.
In the trading game, often doing what feels correct or good is actually the worse thing you can do. While every trade entry has an uncertain outcome, our extensive testing, since 1995, has proven that there are certain occurrences that increase the odds for success in the short term by a statistically relevant factor. These are not feel good, counter intuitive and actually painful entries for many traders, but they have been shown again and again to provide an edge within the one week and less time frame.
This week’s example of a proven winning stock choosing method is the 5-day 10% drop buy trigger. The criteria is first to locate stocks trading above their 200-day simple moving averages. Second, drill down deeper, locating companies that have fallen 10% of more over the last 5 days, yet are still above the 200-day SMA. Lastly, take a look at the Short Term PowerRatings, only focusing on stocks earning an 8 rating or above. Meeting these factors have proven to show positive returns, on average, one day, two days and one week later. Here are 5 stocks for your watch list meeting the above criteria:
Garmin
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Federal Mogul
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Coinstar
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Clearwire Corp
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Sara Lee
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David Goodboy is Vice President of Business Development for a New York City based multi-strategy fund.