PowerRatings Heat Map Focus: Internet
One of the most powerful ways to use our new
PowerRatings
Heat
Maps is to quickly gauge a particular sector’s strength/weakness. The PowerRatings
Heat Map can instantly reveal to a trader where market strength and weakness
lies, using PowerRatings as its primary function. By just looking at a
particular sector from the Heat Map and comparing the number of red
squares to green ones, traders can get an instant visual projection of the
short-term probabilities of that sector’s direction.
 If you are unfamiliar with PowerRatings,
or how to use them, please refer to my
previous article.
Here is a screenshot of the Internet sector from the
close on 6/1/2007. The red squares (stocks with PowerRatings of 1, 2, or 3) are
outnumbering green squares in the internet sector. This tells us that us
the internet sector is displaying price action that has historically led to
short term weakness.Â
Here are selected daily charts from the Internet
Sector Heat Map:
Amazon.com
(
AMZN |
Quote |
Chart |
News |
PowerRating)
Amazon.com has a high PowerRating of 8. The stock
has had a very nice runup recently and is now consolidating. AMZN should be kept
on your watchlist for a potential long entry.
Stocks
which have had a PowerRating of 8 have outperformed the S&P 500 index on average
over the next 5 days by an 5.8-1 margin.
Baidu.com
(
BIDU |
Quote |
Chart |
News |
PowerRating)
Chinese search engine company Baidu.com has a low
PowerRating of 2. Stocks rated 3 or lower have historically underperformed the
S&P 500 Index over the next 5 sessions. Beware of entering stocks with high
PowerRatings after making large moves to the upside. These setups carry
additional risk.
j2 Global Communications
(
JCOM |
Quote |
Chart |
News |
PowerRating)
S&P 600 Small Cap member j2 Global has recently made
a major move to the upside and also has a low PowerRating of 3. Historically
this brings down the edge in trading it to the long side. Aggressive traders may
want to watch it for a potential short entry.
If you would like to attend a free class which covers this
research and strategy further, please
click here
for the calendar of the upcoming online classes. Topics
covered include our latest research on
entries and exits, and
how to use PowerRatings with our new
Preferred Stock List.
For a free PowerRatings trial,
click here. If
you have any questions about PowerRatings or the new Stock Indicators please
feel free to email us or call 213-955-5858 ext 1.
Darren Wong
Associate Editor
Reminder: We are in no way recommending the purchase or short sale of these
stocks. This article is intended for education purposes only. Trading should be based on your own understanding of market conditions,
price patterns and risk; our information is designed to contribute to your
understanding.