PowerRatings Chartology: 3 Stocks for Swing Traders
Massive short selling restrictions imposed by the SEC have so far led to a massive short covering rally in stocks with the Dow up more than 300 points an hour into trading on Friday.
As I’ve been doing for the past several Fridays, I want to take a look at some PowerRatings charts of some of the more notable high Short Term PowerRatings stocks. In my opinion, PowerRatings charts are an excellent analytic tool for swing traders, helping traders spot both the highest quality pullbacks as well as those markets that are most likely to pull back in the near term.
The first stock we’ll look at is First Financial Corporation of Indiana
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THFF |
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PowerRating), which currently has a Short Term PowerRating of 5. As you can see in the PowerRatings chart for this stock, there are three instances in the past several weeks in which high Short Term PowerRatings led to strong rallies in THFF.
We can see this happen in early August, when THFF earned a PowerRatings upgrade from 3 to 8. Closing at 37.20 that day, THFF closed at 40.84 five days later. Another instance took place in late August. It took a few more days for THFF to make similarly impressive gains this time around, taking seven days to add a little more than 5 points.
The most recent pullback in THFF this week has also produced a rally within a short period of time, gaining about a point and a half in within three days.
We also saw strong moves come from the PowerRatings upgrades that Zale Corporation
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PowerRating) has earned over the past several weeks.
Early in the second half of August, ZL:C earned an upgrade to 8. As with THFF above, it took seven days for this stock to truly begin moving — and move it did. Closing at 22.46 on the day of its upgrade, ZLC closed at 27.92 seven days later.
The stock’s most recent upgrade has also resulted in a positive turn in a relatively short period of time. Earning an upgrade to 8 on September 11 and closing at 26.99, ZLC closed at 28.15 within five days.
The last stock we’ll take a look at is Quality Systems Inc.
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QSII |
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PowerRating).
Here, it is the stock’s most recent pullback that we are most interested in. Peaking on September 10th just shy of 48 and earning a Short Term PowerRating of 2, QSII began pulling back aggressively over the next few days. In fact, two days later, the stock had earned an upgrade to 8 (and to 9 the day after).
Again, the upgrade was prescient. QSII closed at 41.51 the day of its upgrade to a Short Term PowerRating of 8. Four days later, the stock closed at 43.68 for a gain of more than 5%.
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David Penn is Editor in Chief at TradingMarkets.com.