TradingMarkets Chart Of The Day

  • October 13, 2006
  • Darren Wong

For today’s Chart of the Day, let’s take a look at the

Bottom RS and ER Lows list published each day on the
Indicators
page.

These stocks have made new lows and
are also ranked in the bottom 15%-20% of both relative strength (RS) and
earnings (ER). Such stocks usually have the best fundamental and technical
prospects to move significantly lower. Also listed are the industry sector,
group and sub-group for each stock.

These stocks are prime candidates for short-sale strategies, including
shorter-term strategies with intraday-sized risk. These trades offer the
opportunity to hold at least part of the position (if they move quickly and
strongly in your favor) for a much longer period, often creating highly
favorable risk/reward ratios. This list keeps you on top of breakdowns from
consolidations to new lows and also helps identify optimum short-sale
opportunities — “runaway” down-market severe-technical-weakness criteria.

One final note: The number of new highs will almost always decrease fairly
markedly before an intermediate-term market peak, while the number of new lows
will almost always increase. Similarly, the number of new lows will almost
always decrease markedly prior to an intermediate-term bottom, while the number
of new highs will increase. To learn how to make the best use of this
indicator,

click here.

Media General
(
MEG |
Quote |
Chart |
News |
PowerRating) has
been trading below its 200-day moving average for the past 13 months,
signaling a harsh downtrend.  MEG has recently hit new lows and has
attempted to rally in yesterday’s session.  Keep this on your watchlist as
a potential short.

Also, with the markets at all time highs institutional money
will go after the hot names and leave the cold ones like MEG.  Use rallies
to get a better entry price for your short positions. 

Darren Wong