Selling Strength and Waiting on Weakness
A late rally in the markets on Wednesday helped bring the Dow up over 1% and the Nasdaq and S&P 500 into the green on the day.
One day later, the stocks I underscored in yesterday’s “5 PowerRatings Stocks for the Next 5 Days” column have all moved higher, some significantly so. Both Starent Networks Corporation
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PowerRating) and Autozone Inc.
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PowerRating) closed above their 5-day moving average in a show of strength that will likely — and rightly, in our opinion — lead to some profit-taking for those who bought the stocks on pullback.
The third stock Siga Technologies Inc.
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PowerRating) rallied by more than 1% after falling for four days in a row above the 200-day moving average. This stock, however, has not yet closed above its 5-day moving average and still has a moderate to low 2-period RSI of less than 48.
There were two short ETFs in yesterday’s column: ProShares UltraShort Utilities ETF
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PowerRating) and ProShares UltraShort Dow 30 ETF.
SDP opened below its 200-day moving average on Wednesday, but managed to rally to close above that level. As a result, the ETF has a higher 2-period RSI (just shy of 12) compared to yesterday (just north of 3). Because of this, the ETF is not as attractive as it was a few days ago, but it remains a potentially interesting opportunity on weakness above the 200-day moving average.
With regard to DXD, we have a short ETF that is continuing to drift lower toward its 200-day moving average. Technically speaking and relying on the 2-period RSI, DXD has been in oversold territory above the 200-day moving average for three consecutive trading days and remains one of the “short ETFs” to watch — again, for intraday weakness.
Going forward, here is an additional stock and an additional short ETF — both with Short Term PowerRatings of 8 — that traders may want to put on their watch lists for the next few days.
ProShares UltraShort Consumer Goods ETF
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PowerRating) Short Term PowerRatings 8. RSI(2): 15.74
Cheniere Energy
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PowerRating) Short Term PowerRating 8. RSI(2): 2.94
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