When Short Term PowerRatings Scream

Stocks rallied into the close again on Thursday, creating increasingly overbought conditions below the 200-day moving average and sending many short ETFs below their 200-day moving averages.

As I have been suggesting for the past few days, continued aggressive buying has boosted stocks — many of which are increasingly overbought below the 200-day moving average.  But the advance has also sent many short ETFs below our trading “line in the sand” of the 200-day moving average.  This means, in part, that many of these short ETFs will no longer offer us the opportunity to take advantage of overbought conditions has we have so successfully over the past several months.

The upside, of course, is that should this trend continue, we are likely to start seeing a growing number of stocks trading above their 200-day moving averages.  Again, as I have alerted traders to this potential change in strategy, this will mean a switch in focus back to high Short Term PowerRatings stocks and away from high Short Term PowerRatings ETFs.

In some ways, if this does come to pass, it couldn’t happen at a better time.  We have just published the results for our Short Term PowerRatings in a new article at TradingMarkets.com.  Go check out the article for yourself but, for now, suffice to say that stocks with high PowerRatings, stocks with Short Term PowerRatings of 8, 9 or 10, continued to outperform the average stock in 2008.

Again, be sure to read the article for yourself.  For short term stock traders, our higher Short Term PowerRatings stocks were consistently superior places to look compared to the average stock — and this in a year in which a large amount of money, including money managed by professionals, was lost in the stock market.

But here’s the real story of Thursday.  Right now, for the first time since I’ve been following Short Term PowerRatings, we have no stocks in our database with Short Term PowerRatings above 6.  No 10s, no 9s, no 8s, and no 7s. 

If our PowerRatings were a sovereign nation as of the close of trading on Thursday instead of a short term stock rating system, that nation would be Switzerland — our readings are that neutral.

This is an incredible statement from the markets and our Short Term PowerRatings, urging us to be patient for the next opportunities to come.

Our highest Short Term PowerRatings stocks have outperformed the average stock by a margin of nearly 17 to 1 after five days. Click here to start your free, 7-day trial to our Short Term PowerRatings!