One of the themes that has come up from time to time in our Stock of the Week columns is the idea that using intraday entry strategies helps you take positions at times when markets are often at their most extreme. While PowerRatings helps identify which markets are the ones where the edges are most abundant in the first place, it is the professional trading toolkit that includes tactics like intraday entry that can make a significant difference when it comes to truly putting PowerRatings to work.
Consider our Stock of the Week this week. It took a little longer than usual. But traders who took advantage of major ratings upgrades in Agilent Technologies (NYSE: A) in mid-February were able to lock in gains a week and a half later as the stock rallied to climb back above its 5-day moving average. As the chart shows, the stock earned “consider buying” ratings of 9 out of 10 on February 13th. But it was not until the follow-through to the downside three days later that traders using “aggressive to moderate” intraday entries of 4% or less were able to take a position in the increasingly oversold Agilent Technologies.
Even as the stock earned top ratings of 10 out of 10, a far better trade was to be had in waiting for the stock to pullback further the day after earning its top rating (ideally, a 9 or a 10). Here in the case of Agilent, traders would have taken a position on Thursday, February 16th that was significantly lower than on the previous two days – days when the stock earned a top rating of 10 out of 10.
The exit did not arrive immediately. But for traders who were patient enough to wait for the dynamic exit signal, the rewards in the form of a short-term gain of two and a half percent or more, depending on the intraday entry level used, were there to be had.
Some of the other stocks that have made significant moves based on intraday entry strategies over the past few days include Conn Inc. (NASDAQ: CONN) and Regeneron Pharmaceuticals (NASDAQ: REGN), both of which finished above their 5-day moving averages in late February within days of earning major PowerRatings upgrades and, more importantly, following-through to the downside to allow for intraday entries at even more extreme levels.
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David Penn is Editor in Chief of TradingMarkets.com