Ultimate PowerRatings Trading Report: 10-Rated ETFs, Stocks Rally from Oversold Extremes
What is the most conservative way to trade stocks and exchange-traded funds (ETFs) using Ultimate PowerRatings?
If you are a trader who only wants to put your hard-earned capital to work in the financial markets when the biggest edges are on your side, then our Stock, ETF and Leveraged ETF PowerRatings have a simple message for you: only trade top-rated stocks and funds.
Our highest rated stocks, the stocks that have earned Stock PowerRatings of 10, have made significant short term gains more than 66% of the time. This is based on quantified, backtests through December 2009 and going back more than a decade.
Leveraged ETFs that earn our highest ratings have performed even better in our historical testing and trade simulations. Going back to 2003 and looking at data through the end of last year, leveraged ETFs with Leveraged ETF PowerRatings of 10 have made short term gains nearly 79% of the time. Non-leveraged ETFs with ETF PowerRatings of 10 performed even better, nearing a success rate of 80% in our backtesting.
With the massive sell-off in recent days, a number of stocks and exchange-traded funds have been earning PowerRatings upgrades to 8 and 9. And for many stocks and funds, the selling on Thursday was the final straw, earning a wide number of stocks and ETFs our highest rating.
And with half the trading for Friday behind us, many of these recently top-rated stocks and ETFs are making significant gains as the end of week, snapback rally sent many of these severely oversold markets soaring.
From the gain of well over 5% intraday on Friday by the ^TNA^, which earned a PowerRatings upgrade to 10 on Thursday to ^CLF^, which gained nearly 6% intraday on Friday after a Stock PowerRatings upgrade to 10. Other short term gainers that earned 10 PowerRatings after Thursday’s sell-off include the ^IWM^ and the ^WNC^.
I’ll have some of these winning markets posted in this week’s Ultimate PowerRatings Trading Weekly Newsletter. If you have not yet subscribed, click here. The Ultimate PowerRatings Trading Weekly Newsletter is free.
As Larry Connors discussed in his Daily Battle Plan (click here to learn more), it is never easy to step in as a buyer when markets are plunging and the news seems relentlessly negative. This has been a frequent theme in my columns for TradingMarkets over the past several days, as well. At times like these traders need to do everything they can to protect themselves by limiting their position size, using options rather than stops when it comes to risk management, or even staying on the sidelines if the volatility is just too much to handle.
Sticking with quantified, backtested trading systems – like PowerRatings – is another way for short term traders to deal with the challenges of trading in volatile times. If you found yourself indecisive over the past few days, wondering whether to buy or sell or sell short, then why not give our statistically-based, data-driven approach to short term trading a try? Click here to take a free 7-day trial to Ultimate PowerRatings – stocks, ETFs and leveraged ETFs all in one place. Find out what data-driven decision making can do for you and your trading.
David Penn is Editor in Chief at TradingMarkets.com.