PowerRatings Strategy Review: A Not-So-Final Four for Traders
Stocks and ETFs advanced on Wednesday, creating growing overbought conditions in a number of domestic sectors and international/emerging markets.
The current rally has helped bring a number of high Short Term PowerRatings stocks higher in recent days. Of the stocks from Tuesday’s “5 PowerRatings Stocks for the Next 5 Days” column, two closed above their 5-day moving averages on Wednesday— a show of strength we use as an exit signal for stocks and ETFs bought on pullback.
For more tips on how to trade PowerRatings stocks, read Larry Connors’ strategy primer: How to Find the Best Stocks to Trade Every Day.
Two out of the remaining three – Starent Networks Corporation
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PowerRating), Cerner Corporation
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PowerRating) — are still above their 200-day moving averages, and have pulled back even further. The fifth, Broadridge Financial Solutions
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PowerRating), moved largely sideways on Wednesday.
Among the more recent stocks (see also “PowerRatings: Smart Profit-Taking or Smarter Buying?”), 99 Cent Stores
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PowerRating) was up nearly 2.5% to close above its 5-day moving average. The other two stocks from yesterday, both restaurant stocks in PF Chang’s China Bistro
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PowerRating) and Papa John International Inc.
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PowerRating), pulled back on Wednesday, but managed to remain above their 200-day moving averages.
All of these remaining stocks from the past two columns — STAR, CERN, PFCB and PZZA — have Short Term PowerRatings of 8. This puts them in that category of stocks that have historically outperformed the average stock by a margin of more than 8 to 1. Short term traders making PowerRatings part of their daily trading strategy should keep an eye on these stocks for intraday weakness that might provide an opportunity to buy into stocks that the market has put on sale.
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!