Trading Opportunities in Commodity Stocks
Today’s look at stocks that have had their Short Term PowerRatings upgraded includes three stocks and one exchange-traded fund–all geared toward taking advantage of the boom in “things” over financial assets.
One of the things I’ve always appreciated about PowerRatings is how, going about their business of measuring volume, volatility, trend and momentum, the PowerRatings nevertheless often reflect some of the “macro” oriented themes that dominate the financial news and talk about the economy.
I noticed this last year looking at the emergence of a number of health care stocks which have since outperformed the average stock.
This morning, the PowerRatings are letting us know that there may still be opportunities in another type of stock: stocks leveraged to the growing demand for commodities and commodity products.
Think about it: all four of the stocks in today’s discussion of short term trading opportunities have significant exposure to the commodity markets. There’s Monsanto, a major agricultural/agri-business company. There’s Potash, a fertilizer and feed products company based out of Canada. No denying what Randgold Resources with its ticker symbol “GOLD” is all about, as a gold mining and exploration company. And last but not least is the PowerShares Base Metals ETF–the name speaks for itself.
What does it mean when a stock gets a PowerRatings upgrade? In short, a stock that has an upgrade in its PowerRating has become an even more attractive candidate for a short-term trade, and catching a stock just as its PowerRatings is upgraded can help traders position themselves for excellent trading opportunities.
Consider this: a stock with a Short Term PowerRating of 8 is likely to outperform the average stock by about 1.6 to 1 after five days. This is based on our research involving millions of simulated trades since 1995. But if that stock’s Short Term PowerRating were just one point higher, that stock would belong to a class of stocks that, historically, has outperformed the average stock by more than 4 to 1 after five days. What a difference a single PowerRating point can make!
All of the stocks in today’s discussion: MON, POT, GOLD, and DBB have Short Term PowerRatings of 8. Based on our research, this means these stocks are likely to outperform the average stock by more than 8 to 1 over the next five days. PowerRatings charts of all four stocks are provided below.
Monsanto
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Potash
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Randgold Resources
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PowerShares Base Metals ETF
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David Penn is Senior Editor at TradingMarkets.com.