Reduce Overnight Risk with this PowerRatings Strategy
Today’s
PowerRatings article will focus on highly PowerRated stocks in the S&P 500
Index.
One of our main rules for successful trading is
to stick with better established companies, and the recent volatility highlights
that point.
Sticking with stocks in major indices can help to minimize overnight risk. While
overnight gaps in equities occur all the time, they tend to occur more in less
established companies, especially those in the technology industry.
Traders/investors should look to trade the better, more
established blue-chip companies, especially those found in the S&P 500. For
those of you who are willing to assume a bit more risk, you can expand your
universe to the NASDAQ 100 companies.
Each day we publish an S&P 500 PowerRatings list,
which can be found
here. Here is a partial list of today’s top PowerRated S&P 500 stocks:
Let’s take a look at charts from S&P 500
companies with PowerRatings of 7 or higher:
Dollar General
(
DG |
Quote |
Chart |
News |
PowerRating)
Express Scripts
(
ESRX |
Quote |
Chart |
News |
PowerRating)
Deere Co.
(
DE |
Quote |
Chart |
News |
PowerRating)
PowerRatings performance shows the returns versus
the S&P 500 for the equivalent 5-day hold. The stocks which have had a PowerRating of 8 have outperformed the S&P 500 index on average over the next 5
days by an 5.8-1 margin. Stocks with a PowerRating of 9 have outperformed by a
10.1-1 margin. Stocks with a PowerRating of 10 have outperformed the S&P by
nearly 14.7-1 margin. This potential edge opens up a number of possibilities for
your trading and investing.
One more interesting fact about the
PowerRatings; PowerRatings of 1 and 2 have on average lost money over the next
week. A PowerRating of 1 has underperformed the S&P 500 by a 5-1 margin.
Obviously, you should ideally be looking to be buying high PowerRating stocks
and avoid (or short) low PowerRatings stocks.
If you would like to attend a free class which covers this
research and strategy further, please
click here
for the calendar of the upcoming online classes. Topics
covered include our latest research on
entries and exits, and
how to use PowerRatings with our new
Preferred Stock List.
For a free PowerRatings trial,
click here. If
you have any questions about PowerRatings or the new Stock Indicators please
feel free to email us or call 213-955-5858 ext 1.
Darren Wong
Associate Editor
Reminder: We are in no way recommending the purchase or short sale of these
stocks. This article is intended for education purposes only. Trading should be based on your own understanding of market conditions,
price patterns and risk; our information is designed to contribute to your
understanding.