PowerRatings Trading Strategies: Market Strength and the 7-Rated Stock

  • April 2, 2009
  • David Penn

Stocks are rallying in the first few hours of trading on Thursday as optimism that there will be some relaxing of mark-to-market rules is providing more inspiration for buyers of financial stocks in particular.

Zion Oil & Gas
(
ZN |
Quote |
Chart |
News |
PowerRating) Short Term PowerRating 7. RSI(2): 19.30

ZN Chart

The bullishness we are seeing early in the Thursday session is reflected in the performance of the 8-rated stocks in our PowerRatings Top 25 Stocks. Of the 12, 8-rated stocks as of Wednesday’s close, five are already trading above their 5-day moving averages in the first hour of trading and another three are up significantly on the day. The rest are either trading below their 200-day moving averages (and thus not eligible for consideration as long trades) or are down slightly.

Read more about PowerRating performance in our recent special: PowerRatings Does It Again — Results for 2008.

We can’t guarantee that high PowerRatings stocks will respond to oversold conditions so quickly every time. But the rallies in these stocks are reminders of many things about our high probability approach to trading. Perhaps foremost among them is the way that oversold markets eventually revert to the mean, allowing bull and bear market to resume their courses. And for savvy short term traders who buystocks and ETFs on pullback, the gains can be swift to follow.

Validus Holdings Ltd.
(
VR |
Quote |
Chart |
News |
PowerRating) Short Term PowerRating 7. RSI(2): 28.84

VR Chart

Because so many of the 8-rated stocks are advancing and will likely not be oversold by the time most traders read this analysis, I’m turning to look at the 7-rated stocks — those stocks that as of Wednesday’s close were only marginally more attractive than the average stock. Many of these stocks are actually not being swept up in Thursday’s rally and may earn PowerRatings upgrades should they continue to move lower over the course of the day. Should these stocks earn those upgrades, traders may want to consider them for possible trades to the upside.

For more tips on how to trade PowerRatings stocks, read Larry Connors’ strategy primer: How to Find the Best Stocks to Trade Every Day

PG&E Corporation
(
PCG |
Quote |
Chart |
News |
PowerRating) Short Term PowerRating 7. RSI(2): 22.12

PG Chart

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.