PowerRatings, ETF Trading and Bonds on Sale
Stocks continue to trend sideways as of Friday’s close, leaving short term traders with few clear edges.
To a degree, the markets are still operating in the wake of last week’s dramatic sell-off which pushed stocks into oversold extremes. And while those oversold extremes did not result in a powerful surge higher, they did help push higher a number of previously oversold, high Short Term PowerRatings stocks that we had been keeping our eyes on.
Right now, with the markets more or less in neutral mode, smart trading in the short term consists largely of watching and waiting. If sellers return in earnest, then we are likely to see an increase in the number of stocks making pullbacks above the 200-day moving average. Those stocks will be among our potential targets for trades to the upside.
If stocks move higher, potentially breaking out of their short term range to the upside, then we should see fewer and fewer high Short Term PowerRatings stocks and, at some point, a spike in the number of stocks with Short Term PowerRatings of 1, our lowest rating reserved for those overbought stocks that are most likely to underperform the average stock in the near term.
One area that continues to pull back are the bond ETFs, especially the iShares Lehman Brothers 20+ Year Treasury Bond ETF, TLT
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PowerRating) and the iShares iBoxx Investment Grade Corporate Bond ETF, LQD
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PowerRating). Both TLT and LQD have Short Term PowerRatings of 8, and have been pulling back since becoming overbought in mid-January.
Another ETF in this category is the Vanguard Extended Duration Bond ETF, EDV
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PowerRating) which has closed lower for four consecutive trading days above the 200-day moving average and has a 2-period RSI of 2.14 as of the Friday close. TLT and LQD have 2-period RSIs of 1.39 and 0.811, respectively.
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.