TradingMarkets Chart of the Day
For today’s Chart of the Day, let’s take a look at the
Stocks Ready To Drop list published each day on the
Indicators
page. These are the stocks that today made new 10-day highs that are still
in an downtrend as they are trading below their 200-day moving average. They are
sorted in rank according to how over-extended they are vs. their 10-day moving
average. These are simple pullback trades, as we get into the trending
market (or short-sell) at a better price before the stock resumes its trend.
This stock is in a downtrend, so we get in when it has moved to an extreme
against the trend.
Goodyear Tire & Rubber
(
GT |
Quote |
Chart |
News |
PowerRating)
has been trading in a confirmed downtrend, below its 200-day simple moving
average since February of 2006. Here we have a weak stock on the move
down. GT has rallied hard towards its moving average since the end of
August, gaining almost 2 points in 5 sessions ( 16%). GT now looks to test
resistance at its moving average. Watch for this rally to fail as GT
resumes its downtrend.
Use pullbacks to get a better entry price on a trending stock.
Watch for trending stocks to make a strong move against the trend, only to fail
and continue in its original direction.