Where the Edges Are: How to Trade Ultimate PowerRatings Stocks and ETFs
With the Dow industrials, S&P 500 and Nasdaq all down by more than 3% and financial pundits comparing a country like Greece to a corporation like Bear Stearns, it is no exaggeration to say that panic selling in the markets, and panic talk in the media are reaching extreme levels.
To be sure, with the markets largely erasing their 2010 gains, anxieties among market commentators and market watchers can be easily understood and readily forgiven.
But for traders actually participating in the market, much of this commentary likely does more harm than help. Should you buy as the market sells off? Should you sell and “wait it out” in cash? Should you join those looking for opportunities to sell the market short?
Our PowerRatings trading strategy – a quantified, backtested approach to trading stocks, exchange-traded funds and leveraged ETFs alike – helps short term traders make those decisions in a consistent, professional way. By looking for those stocks and funds that have earned our highest PowerRatings, traders can take advantage of the biggest quantified, short term edges every day.
Above: The ^SPY^ was among a number of widely traded ETFs that earned major PowerRatings upgrades in trading on Thursday. Also among this group were sector funds like the ^XLF^.
Whether volatility is low, as it has been for much of the past several weeks, or there is the proverbial “blood in the streets”, PowerRatings will always indicate where the best edges in the market are to be found.
Click here to read: “Ultimate PowerRatings Trading Report: Overbought Markets and Inverse Leveraged ETFs”.
When markets were running away to the upside, we pointed you to inverse leveraged ETFs that were earning top Leveraged ETF PowerRatings. When markets pulled back and traders took profits, traders using our PowerRatings to trade many inverse leveraged ETFs were able to lock in gains as well.
And now, when profit-taking begins to turn into panic selling, PowerRatings again can help provide traders with clear, quantified, data-driven direction as to when stocks and ETFs have fallen to levels from which they have historically rallied based on our testing.
Above: Leveraged versions of the same S&P 500 and financials were also among those leveraged ETFs earning major PowerRatings upgrades over the course of the trading day. Pictured above is the ^FAS^.
To be sure, trading stocks and ETFs with PowerRatings can be daunting at first. It is not easy to buy when it seems like the world is selling. Because of this, traders unaccustomed to the PowerRatings trading strategy of buying markets after they have pulled back may want to reduce their position size as they learn how to manage their emotions in what is called “mean reversion” trading.
But for traders who are disciplined in their money management and familiar with the kind of powerful rallies that often accompany significant sell-offs, PowerRatings may be the best thing to add to your short term trading business in years.
To launch your free, 7-day trial to our Ultimate PowerRatings – stocks, ETFs and leveraged ETFs all in one easy-to-read package, click here. Find out what the data-driven trading of PowerRatings can do for you.
David Penn is Editor in Chief at TradingMarkets.com.