PowerRatings, Neutrality and the Waiting Game
Stocks ended the week with a bias, albeit slight, to the oversold. The least oversold market is the Nasdaq Composite, where buyers continue to look toward technology stocks for potential leadership.
Opportunities for both upside and downside are limited right now. Of the Top 25 PowerRatings stocks, while the vast majority of these stocks have Short Term PowerRatings of 8, the vast majority are also trading below their 200-day moving averages. As you know, we are not interested in buying stocks below their 200-day moving averages when the major markets — the S&P 500, the Dow 30, the Nasdaq — are trading below the 200-day moving average.
Of the stocks noted over the past few days, there are a few worth returning to. Most of the stocks from Thursday’s column (“PowerRatings, Profit-Taking and the Next Big Trade”) have rallied above their 5-day moving averages in the past few days. These stocks, which are now moving out of oversold territory and are starting to earn PowerRatings downgrades, are not for new money. And traders who took positions in these stocks should consider taking at least partial profits.
Friday’s column (“PowerRatings, Trading Strategies and Keeping the Edges on Your Side”) introduced another set of three stocks. These stocks, going into Tuesday’s trading, are a bit of a mixed bag. Schweitzer-Mauduit International
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PowerRating), for example, closed below its 200-day moving average on Friday and, while still oversold and statistically likely to rebound, is not a stock for new capital. Another stock, Corinthian Colleges
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PowerRating), is also not for new capital — but that is because the stock soared by well over 6% on Friday, closing above its 5-day moving average and close to overbought territory.
The third stock was Nash-Finch Company
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PowerRating), which pulled back further on Friday, and had retained its Short Term PowerRating of 8, is one stocks for short term traders to keep their eye on.
Should we get a bounce on Tuesday and/or Wednesday, we should start to see Short Term PowerRatings upgrades in short ETFs. If stocks remain oversold — or become even moreso — then we will likely see a greater number — and better quality — of Short Term PowerRating stocks from which to choose.
Our highest Short Term PowerRatings stocks have outperformed the average stock by a margin of nearly 17 to 1 after five days. Click here to start your free, 7-day trial to our Short Term PowerRatings!
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