Trade Strong Stocks That Pull Back
Our number one trading philosophy here at
TradingMarkets has always been to “buy weakness.” We look for strongly trending
stocks and buy them on weakness. With the recent market pullback, we have found
many potential stocks with our new
stock indicators. Today let’s look at one of our best indicators the
2-Period RSI Indicator.
One of the most
popular technical indicators used by traders today is the
Relative Strength
Index (RSI). RSI values range between 0 and 100, with 0 showing extreme
weakness and an oversold condition. Today we will focus on stocks with an RSI
below 2. These stocks have shown positive returns, on average, over the
next 1-day, 2-days, and 1-week later.
 Click
here for more detailed information on TradingMarkets RSI research, which covers over 7 million trades from
Jan 1, 1995 to
June 30, 2006.
Let’s take a look at the 2-period RSI below 2
list from the close of 6/08/07:
Here are a some daily charts of the stocks listed
above:
Immucor
(
BLUD |
Quote |
Chart |
News |
PowerRating)
Diagnostic substance company Immucor
(
BLUD |
Quote |
Chart |
News |
PowerRating) has a high
PowerRating of 8. From the chart above, we can see that price has been pulling
back recently despite the stock being up 64% over the past year. Keep this stock
on your watch list for a potential move back upwards.
Progress Energy
(
PGN |
Quote |
Chart |
News |
PowerRating)
Electric utility company and S&P 500 member Progress Energy has a
high PowerRating of 7. This stock has also been pulling back lately from 5-year
highs. Monitor it for a potential move back up to the highs.
Check out our
latest quantified research articles
here. If
you don’t already have a TradingMarkets subscription,
click here
for a free 7-day trial. Check back daily for more 7 Trading Ideas for Today,
and develop your own watchlist of stocks with historically-backed edges.
Darren Wong
Associate Editor
Reminder: We are in no way recommending the purchase or short sale of
these stocks. This article is intended for education purposes only. Trading
should be based on your own understanding of market conditions, price patterns
and risk; our information is designed to contribute to your understanding.