Use PowerRatings With This Indicator To Find Trending Stocks
Today’s
PowerRatings article will focus on a basic strategy of how to use
PowerRatings with the 200-day
moving average
to find uptrending stocks.
There’s a well known
saying that the trend is your friend. And this saying is very true. The market
behaves better above its 200 day moving average than below it. And the average
gain of the market is far greater when prices have been above the 200 day moving
average than when it has been below it.
This rule is not
fool-proof. Many good value stocks represent real value below the 200 day ma.
But as a whole, without adding any other filters, it’s easier to make money when
buying the market and stocks when the trend is up, not down.
Lets first take a look at they S&P 500 Index to
get a better view on the market as a whole. Then we will take a look more
detailed look at a some individual stocks from our
Pullback From Highs List.
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The S&P has been above its 200-day simple moving
average and trending upwards for the past 2 months. The market appears to
be very healthy with each and every pullback being bought and taken higher.Â
A good place to start your search for uptrending
stocks would be from our
Pullback From Highs List. Then they can be scanned through
PowerRatings and stocks with a 7 or higher should be put on your watchlist.Â
Here are a few selections from our list:
Chicago Board Of Trade Holdings
(
BOT |
Quote |
Chart |
News |
PowerRating)
DTS, Inc.
(
DTSI |
Quote |
Chart |
News |
PowerRating)
Wolverine World Wide
(
WWW |
Quote |
Chart |
News |
PowerRating)
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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.
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.
You can
attend a free
class on how to use
PowerRatings,
presented by Steve Primo, our Director of Education.
Click here to
try
PowerRatings for yourself, risk free.
Darren Wong
Associate Editor
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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.
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