Swing Trading with PowerRatings: Model Trade of the Week in Air Methods
Our Swing Trading with PowerRatings Model Trade of the Week is ^AIRM^.
Air Methods earned PowerRatings of 8 on July 27th and 28th. One day later, AIRM earned an upgrade to 9.
For swing traders, this presented a potential opportunity in the stock using a strategy called intraday weakness
Intraday weakness calls for placing a limit order 2-6% below the close of a session like July 29th, when AIRM earned its PowerRatings upgrade to 9.
If the stock follows through to the downside the next day, trading low enough to reach the preset limit order level, then the trader typically has taken a position in a very oversold stock. Statistically speaking, these are the kind of oversold markets that have tended to outperform the average stock in the shor term.
In this case, a typical intraday limit level of 3% would have allowed swing traders to take a position in Air Methods Corp on August 1st at 67.99.
AIRM maintained its 9 rating for an additional session. But the next day the stock soared to close well above its 5-day moving average, gaining more than 5% in just two days.
It has been a difficult week for many traders and investors. The PowerRatings upgrade and subsequent rally in top-rated stocks like Air Methods Corp. has been one bright spot for many traders looking for opportunities to buy weakness and sell strength in an increasingly volatile market.
To learn more about swing trading using PowerRatings, click here for a free, 7-day trial.
David Penn is Editor in Chief of TradingMarkets.com