Small Caps Still on a Buy Signal
Yesterday we highlighted a trading opportunity in Direxion Daily Small Cap Bull 3X Shares (NYSE: TNA) which then gained 2.52% for the day. Small caps should continue to lead the market higher if the pullback of the last two weeks has ended and TNA is still a buy with a PowerRatings of 9 heading into today’s trading.
Traders may also find a buying opportunity in ProShares UltraShort Silver (NYSE: ZSL) after silver became overbought. ZSL also has a PowerRatings of 9.
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. For best results, enter trades on stocks with a PowerRatings of 8 or higher with a limit order 3-7% below 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.
In the past, buying stocks with a rating of 9 on a 3% pullback the next day and selling five days later has been profitable 75% of the time. The average winner has gained 4.3%. Other entries and exits also show high winning percentages and large average gains.
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All data is as of the end of day on 2/6/2014.