Use PowerRatings to Find the Strongest ETFs
Today’s
PowerRatings article will take a look at our list of
PowerRatings ETF’s. Exchange Traded Funds are great for day trading or
swing trading because of their liquidity and the ability to short even on a
downtick. They also can help in reducing risk because they are tied to a
basket of securities and not one individual stock making them less volatile for
overnight/swing trades.Â
Using our ETF PowerRatings list, we can easily
determine which sectors will be most likely to move up or down in the coming
week. You
could look to buy the strongest sectors (PowerRatings of 7-10) and sell (short)
the weakest sectors (PowerRatings of 1-3).Â
For more aggressive traders,
this strategy can be
taken a step further by drilling down to see the individual sector components
and their PowerRatings.
Here is a partial list of the ETF Rankings from
Tuesday October 3, 2006:
From 1995-2005,
stocks with a PowerRating of 8 have outperformed the S&P 500
index on average by an 8.3-to-1 margin, while a PowerRating of 10 doubles that
performance to 16.3.
PowerRatings also help indicate a stock’s
downside as well as timely short-sale entry points; PowerRatings of 1 and 2 have
on average lost money over the next week. A PowerRating of 1 typically
underperformed the S&P 500 by a 5-1 margin. Obviously, you should ideally be
looking to buy high PowerRating stocks and avoid (or short) low PowerRatings
stocks.
iShares Goldman Sachs Software Index Fund
(
IGV |
Quote |
Chart |
News |
PowerRating)
Retail HOLDRs Index Fund
(
RTH |
Quote |
Chart |
News |
PowerRating)
Telecom HOLDRs Index Fund
(
TTH |
Quote |
Chart |
News |
PowerRating)
S&P Consumer Staples Index Fund
(
XLP |
Quote |
Chart |
News |
PowerRating)
iShares MSCI Taiwan Index Fund
(
EWT |
Quote |
Chart |
News |
PowerRating)
Â
Click here to
try
PowerRatings for yourself, risk free.
Darren Wong
Associate Editor
Want a free month of PowerRatings?
Send us your PowerRatings
strategy and receive one free month of this exciting trading tool. If you are
already a monthly or annual PowerRatings
subscriber, you will receive an additional three months if we publish your
strategy.
Reminder: We are in no way recommending the purchase or short sale of these
stocks. This article is intended for education purposes only. Trading should be based on your own understanding of market conditions,
price patterns and risk; our information is designed to contribute to your
understanding. Controlling risk through the use of protective stops is critical.