PowerRatings Review and Outlook: More Strength, More Exits
Let’s take a quick review of the 5 stocks highlighted at the beginning of this week in 5 PowerRatings Stocks for the Next 5 Days as potential opportunities for traders looking to buy stocks on pullback.
The two most impressive gainers were Orbitz Worldwide
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PowerRating) and First Third Bancorp
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PowerRating). Orbitz gained more than 21% from Friday’s close to Thursday’s close, while First Third rallied by nearly 13% over the same time period.
More modest gains were the case for both Hasbro Inc.
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PowerRating) and The Travelers Companies
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PowerRating), which gained a little over and a little under 1% respectively over the same time frame.
The last stock in our list, Columbia Banking System
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PowerRating), is the only one that is still in the red despite a bump of nearly 1% on Thursday.
With stocks continuing to ramp higher in the first few hours of trading on Friday, the number of high PowerRating stocks — stocks with PowerRatings of 9 and 10 — remains low. This, as I have noted in the past, is one way that PowerRatings traders can use PowerRatings not just to help pinpoint the best stocks to trade every day, but also to analyze the condition of the stock market as a whole.
When we see that there are a high number of stocks with PowerRatings of 9 and 10, we know that the market is likely in pullback mode. This means not only that the opportunities for high probability trades have grown in number, but also that the quality of the pullbacks is likely to be superior. These are the times when high probability traders need to be at their sharpest and most ready to trade.
However, there are other times when the number of 9s and 10s is small — or when there are no 9s and 10s, at all. This is a signal from PowerRatings that there are very few edges in the market — if any — and that PowerRatings traders should be very cautious when it comes to taking new trades. While any one stock may provide an opportunity for a good trade, traders should understand that in such moments, they do not have the wind at their backs and may benefit from remaining on the sidelines until sharper edges appear.
Our highest Short Term PowerRatings stocks have outperformed the average stock by a margin of more than 14 to 1 after five days. Click here to start your free, 7-day trial to our Short Term PowerRatings!
David Penn is Editor in Chief at TradingMarkets.com.