What was XNPT’s PowerRating Before Rising 45%?
One of our main trading philosophies here at
TradingMarkets is “Buy Weakness”. We like to focus on strong stocks that
pull back, which gives us a better price entry. Today’s
PowerRatings article looks at how we could have caught a major move in small
cap biotech company, Xenoport Inc.
(
XNPT |
Quote |
Chart |
News |
PowerRating).
From the chart below, we can see that XNPT
received a high of 7 on 4/23/07. Just 2 days later, it showed a gain of
45.3%. Stocks
with high PowerRatings have been historically proven to outperform the S&P 500
Index over the next 5-8 sessions.Â
Let’s look at a possible entry and exit
technique. The first blue arrow shows a possible entry at the next
morning’s open at a price of $28.60. One possible exit strategy is to exit
the position on a close above a moving average. In this example we use the
10-day simple moving average (blue line). On 4/25/07, XNPT closed above the
10-day moving average at a price of $41.56 and the stock could have been exited.Â
This would have led to a gain of 45.3% in just 2 sessions.
Also, we can use a technical indicator to further
investigate potential stocks. The 200-day simple moving average
can quickly tell us the direction of the trend. XNPT’s 200-day moving
average was at $23.54 on 4/23/07, showing that XNPT was in a strong uptrend.Â
Click here for detailed research by Ashton Dorkins and Larry Connors on how
the 200-day moving average can be used. This indicator along with a high PowerRating made
XNPT a strong buy on
4/24/07.
If you would like to attend a free class which covers this
research and strategy further, please
click here
for the calendar of the upcoming online classes. Topics
covered include our latest research on
entries and exits, and
how to use PowerRatings with our new
Preferred Stock List.
For a free PowerRatings trial,
click here. If
you have any questions about PowerRatings or the new Stock Indicators please
feel free to email us or call 213-955-5858 ext 1.
Darren Wong
Associate Editor
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.