TradingMarkets 5 Stocks for the Next 5 Days: EGO, AZK, GSX, TRMA, BZP
With the markets putting in a short-term bottom–or so it appears–opportunities for traders to buy weakness are not quite as numerous as they were a few short days ago.
Gold and mining shares may be the exception. But as the markets in general move from being exceptionally oversold to something short of overbought, many of the high quality pullbacks that we wrote about in the second half of last week have vanished as stocks have, in general begun to recover.
This, fortunately, does not mean that all opportunities are lost for those traders who practice buying low and selling high. It simply means that we will have to continue looking–as opposed to abandoning our tried and true approach to trading the markets in the short-term.
All of the stocks in today’s report–including the one stock that had its PowerRating upgraded intraday–have Short Term PowerRatings of 8. What does it mean to have a Short Term PowerRating of 8?
Let’s think about it this way. We conducted a study involving millions of millions of simulated, short-term stock trades from 1995 to 2007. As a result of this research, we were able to categorize stocks on a scale of 1 to 10 based a variety of characteristics including trend, volatility, volume and momentum. Stocks at the highest end of our rating system, those stocks that received Short Term PowerRatings of 10 were found to be powerful performers in the short term. These stocks, according to our research tended to outperform the average stock by a whopping 16.9 to 1 over the next five days.
In other words, if you find a stock with a Short Term PowerRating of 10 in the middle of the road, buy it.
What about the other end of the spectrum? Our research enabled us to conclude that stocks at the opposite end of the rating system, those stocks that received Short Term PowerRatings of 1 actually underperformed the average stock, on average. How bad was the underperformance? We found that stocks with a Short Term PowerRatings of 1 actually underperformed the average stock by almost 5 to 1.
This means two things: one, that you would actually do better to throw darts at a stock table than buy a 1-rated stock and, two, stocks with Short Term PowerRatings of 1 should be high on your list of potential short selling candidates.
With five stocks having Short Term PowerRatings of 8, we are looking at stocks that while not as likely to perform as well as the 10-rated stocks, are still the kind of stocks that traders can confidently trade in the short term. We found that stocks with Short Term PowerRatings of 8 actually outperformed the average stock by approximately 8.3 to 1.
Below I have listed the five stocks in today’s report–which includes one stock, BZP Resources
(
BZP |
Quote |
Chart |
News |
PowerRating) that actually started the day with a Short Term PowerRating of 7, but had its PowerRating upgraded to an 8 by the close of the trading session.
El Dorado Gold
(
EGO |
Quote |
Chart |
News |
PowerRating). RSI(2): 3.19
Aurizon Mines
(
AZK |
Quote |
Chart |
News |
PowerRating). RSI(2): 17.46
Gasco Energy
(
GSX |
Quote |
Chart |
News |
PowerRating). RSI(2): 39.28
Trico Marine Services
(
TRMA |
Quote |
Chart |
News |
PowerRating). RSI(2): 20.82
BZP Resources
(
BZP |
Quote |
Chart |
News |
PowerRating). RSI(2): 13.87. (Updated chart not available)
There are five things that every successful short term stock trader knows about trading markets like these. We have published all five in a new, special report called “5 Secrets to Short Term Stock Trading Success” now available for free. Learn what key factors are involved in turning mediocre speculators into professional-grade, short-term stock traders–and how our Short Term PowerRatings can play a part. Click here for your free report–or call us today at 888-484-8220.
David Penn is Senior Editor at TradingMarkets.com.