Try this PowerRatings technique to catch big movers
In last Monday’s article I covered Strategy 4 in the
TradingMarkets PowerRatings Strategy Guide. Strategy 4 says “Focus on the
stocks that have the biggest daily increases in their PowerRatings.”
These stocks have tended to do especially well if they’ve had an increase in
their rating by at least 2 points or more and they have a PowerRating of 7 or
higher today. The rule is: the bigger the PowerRating change to the upside,
combined with the today’s higher PowerRating, the better the stock has performed
over the next week.
Here is last week’s list, with their five day returns. As
I mentioned last week, this is a list of potential buy candidates
(PowerRatings alone are not buy or sell signals).
| Symbol | PowerRating | Change | % Return | Symbol | PowerRating | Change | % Return |
( BONT | Quote | Chart | News | PowerRating) |
8 | 3 | -10.57 | ( BLDP | Quote | Chart | News | PowerRating) |
7 | 2 | 14.62 |
( PRLS | Quote | Chart | News | PowerRating) |
8 | 2 | -6.83 | ( MRVC | Quote | Chart | News | PowerRating) |
7 | 2 | -2.93 |
( TXCO | Quote | Chart | News | PowerRating) |
7 | 2 | 0.71 | ( CIEN | Quote | Chart | News | PowerRating) |
7 | 2 | -7.68 |
( LPTH | Quote | Chart | News | PowerRating) |
7 | 2 | -10.22 | ( OS | Quote | Chart | News | PowerRating) |
6 | 4 | 1.23 |
( HOM | Quote | Chart | News | PowerRating) |
7 | 2 | 5.77 | ( ERS | Quote | Chart | News | PowerRating) |
5 | 4 | 10.29 |
As you can see, this is a pretty mixed bag, with
some good performances and some bad ones. Over the same five day period the S&P
500 gained only 0.05%. That means to stand a chance of making money last week
you would have needed a well defined strategy — one designed specifically to help
you find the winners, while avoiding the losers.
Every week, Steve Primo, TradingMarkets Director of Education, teaches an
Advanced PowerRatings Class (click
here for more details). Among the various topics taught in these classes are
Entry Techniques.
One of the entry techniques taught by Steve uses trailing stops. Essentially
what this means is that after a stock has a high PowerRating and is on your
watch list as a potential buy candidate, you only enter the trade if the stock
trades above the previous day’s high (starting the day after it had a high
PowerRating).
Here’s an example using Bon-Ton Stores (BONT) from our table of stocks (above):
As you can see from the chart, BONT had a PowerRating of 8 (Up Change +3) on
04/03/06. However, starting on 04/04/06 the stock never managed to trade above the previous day’s
high, it just kept on declining. But, by using this entry technique you would
have avoided this losing trade.
In fact, this technique would have helped you avoid all the big losing trades from
the above list, while you would have entered all the profitable trades.
Click here
to take a free trial of
PowerRatings.
You can also
attend a free
class on how to use
PowerRatings
presented by Steve Primo, our Director of Education.
Ashton Dorkins
Editor-in-Chief