Top PowerRatings Pullbacks for Short Term Traders: AU, BEAT, ESI
Profit-taking has characterized stock trading in the first few hours of trading on Monday as news of collapsed talks between IBM
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PowerRating) is taken as an opportunity to sell.
From a PowerRatings perspective, the selling is a welcome insofar as it helps create additional opportunities for us to buy quality stocks as they move lower. While we have been able to find high PowerRatings stocks during the market’s current “Race to the 200-Day,” those stocks have not been plentiful and traders have had to be both patient and discriminating when it comes to making their stock selections.
Of the stocks from our most recent column, PowerRatings: Trading Recession Stocks and Short ETFs, two of the stocks — Family Dollar Stores
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PowerRating) and Dollar Tree Inc.
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PowerRating) – are higher while a third, Anglogold Ashanti
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PowerRating), continues to pullback and, with its PowerRating of 8, remains a stock that mean reversion traders looking for especially deep pullbacks should keep an eye on.
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Both of the short ETFs from our last column are also higher on Monday — the ProShares UltraShort Consumer Goods ETF
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PowerRating) and the ProShares UltraShort Industrials ETF
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PowerRating). A number of these short ETFs no doubt have looked like scary trades to many, as they plunged toward their 200-day moving averages, becoming more and more dramatically oversold. Nevertheless, the selling on Monday has helped buoy these shares and traders who took advantage of the sale prices on short ETFs such as SZK and SIJ should begin looking for exit opportunities on closes above the 5-day moving average.
Going forward, we will keep an eye on stocks like AU that continue to pullback, as well as other stocks with Short Term PowerRating of 8 or higher — like Cardionet Inc.
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PowerRating), which has closed lower for the past three days above the 200-day moving average and has a 2-period RSI of less than 7 and ITT Educational Services
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PowerRating), which trades for more than $112 a share and has a 2-period RSI of less than 11.
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David Penn is Editor in Chief at TradingMarkets.com.