PowerRatings Trading Strategies: 3 Nasdaq Stocks for Traders
Stocks are off to a strong start on Tuesday, following Monday’s overbought sell-off.
The rally in stocks, which has the Dow, S&P 500 and Nasdaq up more than 1% nearly two hours into trading, has helped boost a number of high Short Term PowerRatings stocks this morning. For one example, Leap Wireless International
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PowerRating), which had a PowerRating of 9 as of Monday’s close, is up more than 3% intraday today on Tuesday.
While not every high PowerRatings stock will make moves this dramatically, this soon, the rally in LEAP is what high probability trading is all about. LEAP had fallen from a closing high of 37.61 on March 26 to a closing low of 34.29 on Monday, March 30. Over that time period:
LEAP’s 2-period RSI fell from over 54 to less than 8, indicating a stock that is becoming very oversold very quickly.
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LEAP’s Short Term PowerRating rallied from a “consider avoiding” 3 to a “consider buying” 9.
Recall that our research indicates that stocks with Short Term PowerRatings of 9 have outperformed the average stock by a margin of more than 13 to 1 after five days. Read more about PowerRating performance in our recent special: PowerRatings Does It Again – Results for 2008.
These are the kinds of signs that we teach short term stock traders to look for. Our high probability trading strategy focuses on stocks (and ETFs) with the largest edges, and our research going back more than a decade indicates that for short term traders, the largest edges can be found in buying oversold markets trading above the 200-day moving average and in selling overbought markets trading below the 200-day moving average.
Here are another set of stocks – all from the Nasdaq – that short term traders might want to keep an eye on over the next few days. These three stocks have Short Term PowerRatings of 8, putting them in that category of stock that has outperformed the average stock by a margin of more than 8 to 1 after five days.
National Cinemedia Inc.
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PowerRating) Short Term PowerRating 8. RSI(2): 15.81
Lancaster Colony Corporation
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PowerRating) Short Term PowerRating 8. RSI(2): 7.07
Sun Microsystems
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PowerRating) Short Term PowerRating 8. RSI(2): 11.96
Note: PowerRatings and 2-period RSI are as of the Monday, March 30 close.
For more tips on how to trade PowerRatings stocks, read Larry Connors’ strategy primer: How to Find the Best Stocks to Trade Every Day.
Did you miss yesterday’s PowerRatings Daily Analysis article? Find it here: 5 PowerRatings Stocks for the Next 5 Days: STAR, NSH, GFI, BR, CERN.
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!
David Penn is Editor in Chief at TradingMarkets.com.