PowerRatings Chartology: Trading the Swings in VNUS, GG, FFIV
The premarket index futures suggested massive selling at the open. But the wind that has been at the backs of bulls for the past two days has continued in the first few hours of trading on Thursday, with the Dow, S&P 500 and Nasdaq all well off their pre-market lows.
The only thing more helpful for swing traders than our Short Term PowerRatings may be our PowerRatings charts. Not only do our PowerRatings charts help traders see how markets can become more attractive as they move lower, but also they allow swing traders to make a broader and more comprehensive use of our Short Term PowerRatings, particularly as analytic tools to help anticipate moves in stocks.
This morning we’ll take a look at three stocks with high Short Term PowerRatings of 8 – along with their respective PowerRatings charts. We’ll see how stocks have responded to past PowerRatings upgrades to 8 or higher, and how low Short Term PowerRatings can help swing traders anticipate pullbacks.
Vnus Medical Technologies Inc.
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VNUS |
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PowerRating) Short Term PowerRating 8. RSI(2): 1.35
Let’s first take a look at the PowerRatings chart of VNUS. Since June, low Short Term PowerRatings have done an excellent job of alerting swing traders to short term pullbacks. We can see this repeatedly in early June, in the second half of June and in the rally that led to the current pullback in VNUS that we see today.
We can see the same time in the other direction, as Short Term PowerRatings upgrades to 8 anticipated short term lows. Note for example the upgrades to 8 that occurred in VNUS in early July. VNUS earned a Short Term PowerRating upgrade on July 2nd with a close of 19.45. Five days later, VNUS was closing at 21.89.
Goldcorp Inc.
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GG |
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PowerRating) Short Term PowerRating 8. RSI(2): 10.56
Another excellent example of the capacity of low Short Term PowerRatings to anticpate pullbacks can be seen in this PowerRatings chart of Goldcorp.
On two occasions – in late June and early July – Goldcorp’s PowerRating fell to a 3. In both instances, the stock was significantly lower within days. In fact, five days after the stock received a PowerRating downgrade to 3, the stock was not only lower (from $48.15 to $43.85), but on that same day earned a PowerRating upgrade to 8.
And five days after that PowerRating upgrade to 8, GG was closing several points higher once again.
Let’s take one more look at a PowerRatings chart of our of our top-rated stocks for today.
F5 Networks Inc.
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FFIV |
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PowerRating) Short Term PowerRating 8. RSI(2): 9.09
The PowerRatings chart of F5 is in many ways similar to the chart of Goldcorp. Again, we can see how low Short Term PowerRatings anticipated significant turning points in the price movement of the stock. If anything, the reactions in FFIV were even more significant and sharp than the reactions in GG. Note in particular the pullbacks in June and the rallies that followed when those pullbacks bottomed and the Short Term PowerRatings soared.
All three stocks in today’s report have Short Term PowerRatings of 8. Recall that our research indicates that stocks with Short Term PowerRatings of 8 have outperformed the average stock by a margin of more than 8 to 1 after five days.
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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David Penn is Senior Editor at TradingMarkets.com.