The FOMC Meeting and 5 Multiple Edge Stocks for Short Term Traders
All eyes are on the Fed today. The market may drift listlessly in anticipation of the FOMC statement at 2:15 PM EST. While they are unlikely to make direct interest rate changes at this time, further quantitative easing measures, to give another kick in the butt to the economy, may be on their way.
Traders worldwide will be fixed to the financial news networks closely monitoring changes in the Fed sentiment or rhetoric signaling major stock market moving potential. The major indexes have fallen steeply during the first 2 days of the week, although they are still trading above their 200-day simple moving average, indicating that the uptrend remains solidly in place. Although no one knows what the future holds in these uncertain times, there are strategies that savvy short-term stock traders can utilize to place the odds firmly in their favor over the next week’s time frame.
This article will discuss an indicator that has come as close to being a Holy Grail stock picking tool that we have ever proven effective via extensive testing. In fact, our testing on this tool with true edge goes back to 1995 covering over 8 million trades. This piece will also share 5 stocks that fit the criteria for you to add to your watch list today!
The indicator is the 2-period Relative Strength Index, RSI(2). Originally developed by technical trading pioneer, Welles Wilder, using a 14 -period time frame, measures the magnitude of a stock’s recent gains to the magnitude of the its recent loses. While our testing clearly indicates that no edge exists with the original formula, tweaking the time frame to 2 has proven to have statistically significant edge. The average returns of stocks with an RSI(2) below 1 strongly outperformed the benchmark over 1, 2 days and 1 week later.
Here are 5 stocks trading above their 200-day MAs, indicating a strong uptrend, an RSI(2) below 1, and a Short Term PowerRating reading above 8 Â for short-term traders now:
Protalix Biotherapeutics [PLX|PLX:] Short Term PowerRating 10. RSI(2) 0.59
Tesco Corp. Â
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PowerRating)  Short Term PowerRating 9. RSI(2) 0.91
Skyworks SolutionsÂ
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PowerRating) Short Term PowerRating 8.  RSI(2) 0.33
Immunogen Inc.Â
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PowerRating) Short Term PowerRating 9. RSI(2) 0.23
Novellus SystemsÂ
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PowerRating) Short Term PowerRating 8. RSI(2) 0.16
Note that all 5 stocks in today’s report have Short Term Power Ratings above 8. Learn more strategies for trading stocks in the short term with a free trial to our Power Ratings! The highest rated stocks have outperformed the average stock by a margin of more than 14 to 1 over 5 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.
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