PowerRatings Five & Dime: 5 Top Stocks Under $10

What could be better than stocks with high Short Term PowerRatings? How about stocks with high Short Term PowerRatings that are trading under $10?

We consider the timeframe for short term stock trading to be five to eight days. This is borne out by the research that we have done, examining millions and millions of simulated stock trades between 1995 and 2007.

But one of the things we have noticed about buying stocks as they pullback is that they often react swifter and more powerfully to their oversold conditions than even we suspect. In our daily TradingMarkets Battle Plan for Stocks, for example, we have had a number of potential trades that appeared on our radar the night before, were filled shortly after the open of the following day, and were exited on the close. Today, we alerted subscribers of an exit this morning in an opportunity we first pointed to on Monday.

To learn more about our TradingMarkets Battle Plan for Stocks, click here.

One way for traders to make the most out of short term moves is to buy stocks in size. This is perhaps one of the reasons why so many traders like to trade low-priced stocks, preferably those trading under $10. Trading low-priced stocks makes it easier for the average trader to take a 500 or 1,000 stock position, which in turn makes the sort of 1, 2, or 3 point moves we have seen in some of these short term trades all the more worth pursuing.

There is nothing inherently better about trading low-priced stocks compared to higher priced stocks. But they remain a major attraction for traders–especially on the long side. The five stocks under $10 offered here do not have the highest Short Term PowerRatings, but their PowerRatings of 8 or higher do put all five stocks in that “consider buying” category that we encourage short term traders to focus on when looking for opportunities in the market.

The weakness we are seeing in the markets early on Thursday is providing an opportunity for these stocks that are already in pullback mode to pull back even further. As of this writing, all five stocks are lower in the first few hours of trading on Thursday than they were when they appeared on our screens as of Wednesday’s close. From our perspective, as buyers of weakness, this is a potentially positive development toward having more quality pull backs to choose from.

Again–and to wrap up–all five stocks in today’s report have Short Term PowerRatings of 8. Our research indicates that stocks with Short Term PowerRatings of 8 tend to outperform the average stock by a margin of more than 8 to 1 after five days.

Note also the 2-period Relative Strength Index values that accompany each stock. Most of the stocks in today’s report have RSIs of less than 20, but note in particular the one stock that has an exceptionally low 2-period RSI of less than 5.

Pier One
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. Short Term PowerRating: 8. RSI(2): 11.60

Polyone
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. Short Term PowerRating: 8. RSI(2): 16.03

Metallica Resources
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. Short Term PowerRating: 8. RSI(2): 10.01

Northgate Minerals
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. Short Term PowerRating: 8. RSI(2): 3.17

Valence Technology
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. Short Term PowerRating 8. RSI(2): 14.59

Join Larry Connors, CEO and founder of TradingMarkets, Thursday, April 24nd at 1 p.m. Eastern for a special presentation announcing the opening of our Swing Trading College. Our Swing Trading College has been one of our more popular products and we are happy to be making this 14-session, online course available to our readers and subscribers. The Conference Call will last for approximately 30 minutes.

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That’s Larry live Thursday at 1 p.m. Eastern for the TradingMarkets Swing Trading College. Spaces are limited, so click here to reserve your spot today.

David Penn is Senior Editor at TradingMarkets.com.