Stock Picking Gold: 3 Easy Steps to Success
The most important factor for successful short term stock trading is the need to find stocks most likely to grow quickly over the very short term. In this case, I mean in a week or less. Our extensive studies into the inner nature of stocks have discovered a simple and easy to implement 3 step systems for locating these companies most likely to appreciate over the short term. This article will lay out the steps and provide 3 stocks fitting the criteria for this week.
The first and most critical step is to only look at stocks trading above their 200-day simple moving average. This assures that a strong, long term up trend is in place, increasing the odds that you are not buying into a falling knife or catching a stock in a death spiral.
The second step is to drill deeper into the list locating stocks that have fallen 5 or more days in a row. Yes, you heard me right, fallen 5 or more days in a row. I know this flies in the face of conventional wisdom of buying stocks as they climb higher. However, our studies have clearly proven that stocks are more likely to increase in value after a period of down days than after a period of up days.
The third and final step is a combination of whittling the list down even further by looking for names whose 2-Period RSI (RSI(2)) is less than 2 (CLICK HERE for RSI(2) explanation) and the Short Term PowerRating is 8 or higher.
The stocks that fulfill each of the above steps have proven in extensive, statistically valid studies to possess solid odds of increasing in value over the 1 day, 2 day and 1 week time frame.
Here are 3 interesting names meeting the criteria for your watch list:
Boston Beer
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SAM |
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PowerRating): Short Term PowerRating8; Down 5 plus days; RSI(2) 1.38
Children’s Place
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PLCE |
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PowerRating): Short Term PowerRating 9; Down 5 plus days; RSI(2) 0.26
Weight Watcher’s
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WTW |
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PowerRating): Short Term PowerRating 8; Down 5 plus days; RSI (2) 0.76
Learn more strategies for trading stocks in the short term with a free trial to our PowerRatings! The highest rated stocks have outperformed the average stock by a margin of more than 14 to 1 after five days! Click here to launch your free PowerRatings trial today!
David Goodboy is Vice President of Business Development for a New York City based multi-strategy fund.