PowerRatings are based on the relative strength or weakness of particular stocks or ETFs. The higher the rating, the greater the one week historical gain has been for stocks and ETFs with that rating. Stocks with low ratings have a tendency to underperform the market. For best results, enter short trades with a limit order 3-7% above the previous day’s closing price. Higher % limit entries have historically shown a greater percentage of winning trades but higher % limit orders also reduce the chance of trade execution.
Heading into the open on Monday, no stocks or liquid ETFs have a PowerRatings of 9 or 10. That indicates traders might find more opportunities on the short side. With a PowerRatings of 1, Vanda Pharmaceuticals (NASDAQ: VNDA) could be an excellent trading candidate.
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VNDA jumped on news that the FDA is likely to approve a drug that is currently in late-stage trials. Skeptics point out that test results have been inconclusive and the drug might not help much more than existing treatments. If the potential market for the drug does prove to be small, the stock’s price could fall as quickly as it rose.
In the short-term, VNDA is overbought with a PowerRatings of 1 and the stock could be a short candidate over $15.03.
All data is as of the end of day on 11/15/2013.