PowerRatings Roundup: Overbought Markets and Exiting into Strength
The continued surge in stocks means two things for PowerRatings traders.
First, now is the time to be exiting into strength. Our strategy of buying oversold, high PowerRatings stocks means that we want to be exiting these stocks as they recover and move higher. And when stocks are shooting higher as they have been in recent days, PowerRatings traders are not looking for opportunities to climb on-board, we are looking for opportunities to exit.
With regard to recent stocks highlighted in this column, those opportunities have abounded. Right Now Technologies
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PowerRating) closed above its 5-day moving average on Monday and continued higher on Tuesday. The same can be said for MGIC Investment Corporation
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PowerRating) and Unilever N.V.
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PowerRating). Traders who bought these stocks on pullback should be taking advantage of the surge in these stocks to take profits.
For more tips on how to trade PowerRatings stocks, read Larry Connors’ strategy primer: How to Find the Best Stocks to Trade Every Day.
The other two stocks mentioned recently — Ritchie Brothers Auctioneers
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PowerRating) and Hansen Natural Corporation
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PowerRating) — have moved higher, but have not yet shown the requisite strength to close above their 5-day moving averages. Any short-term strength over the next few days will likely push these stocks higher and, potentially, above their 5-day moving averages.
Looking forward, the name of the game is certainly patience. We haven’t yet begun to feel the sort of manic enthusiasm that every significant rally engenders soon enough — and we may have the arrival of the sleepy, summer months to thank for that. But sooner or later, these overbought markets will correct. And in those corrections will be opportunities for traders patient enough to wait for the high probability moment to arrive before striking.
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.
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