SPY Gives a PowerRatings Buy Signal
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 these trades 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.
SPDR S&P 500 (NYSE: SPY) ended the day yesterday with a PowerRatings of 9.
As expected in a short-term market decline, other index ETFs are also on PowerRatings buy signals and inverse ETFs are overbought and giving sell signals.
Traders should look for long trades on additional weakness. SPY could be a buy under $174.36. More aggressive traders should consider ProShares Ultra S&P500 (NYSE: SSO), a leveraged ETF that moves twice as much as the S&P 500 index on any given day, also has a PowerRatings of 9 and could be a buy under $93.61.
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All data is as of the end of day on 12/3/2013.