Trend Lower, Stocks Higher? Three Pullbacks for Swing Traders
The trend has been lower over the past few days, allowing more and more stocks to become oversold and, potentially, opportunities for short term stock traders.
The three stocks listed below, all with Short Term PowerRatings of 8, belong to that class of stocks which, according to our research going back to 1995, have outperformed the average stock by a margin of more than 8 to 1 after five days.
USA Mobility Inc.
(
USMO |
Quote |
Chart |
News |
PowerRating) Short Term PowerRatings 8. RSI(2): 13.06
Rohm and Haas Inc.
(
ROH |
Quote |
Chart |
News |
PowerRating) Short Term PowerRatings 8. RSI(2): 34.37
HMS Holdings Corporation
(
HMSY |
Quote |
Chart |
News |
PowerRating) Short Term PowerRating 8. RSI(2): 23.30
As the broader markets have moved lower, so have all three of these stocks. But because these stocks are trading above their 200-day moving averages, we can consider them potential long opportunities — compared with the markets themselves.
While stocks can have high Short Term PowerRatings and trade both above and below their 200-day moving averages, there are conditions during which traders should stick only to those stocks that are above their 200-day moving averages. We have found that time to be when the major markets — the Dow industrials, the S&P 500 and the Nasdaq — are trading below their 200-day moving averages.
When this happens, as has been the case now for several months, we know we are dealing with pronounced weakness in stocks overall. As such, we want to have as many edges on our side as possible. And one of the most fundamental edges we have uncovered in our research indicates that stocks that are trading above their 200-day moving averages make for better long trades than do stocks that are trading below their 200-day moving averages.
With this in mind, keep an eye on USMO, ROH and HMSY as they trade early in the week. Selling in these stocks has already been pronounced and it might not take much more selling to cause buyers to rush back into these markets.
According to a recent report, eight out of ten securities traded are exchange-traded funds. Want to learn how to trade them? Click here to find out what traders are saying about Larry Connors’ new book, Short Term Trading Strategies That Work: A Quanitified Guide to Trading Stocks and ETFs!