A PowerRatings upgrade to 9 is a significant event in the life
of a stock.
Historically speaking - going back to 1995 - stocks that earn
PowerRatings upgrade to 9 have tended to make significant short
term gains. This makes stocks that earn PowerRatings of 9 or, even
better, our highest rating of 10, the kind of stocks that short
term swing traders should keep on their stock trading watch
There are many different ways to trade these top rated stocks.
But one of the best quantified strategies is to buy the stock not
on the day it earns the upgrade to 9 or 10, but on the following
day if the stock trades lower on an intraday basis.
Here's an example of how it works. Shares of
) earned PowerRatings of 8 on September 1st. This two-point upgrade
came as the stock pulled back for a third day in a row above the
200-day moving average.
The following day the stock closed lower for a fourth day in a
row. This fourth consecutive lower close above the 200-day moving
average and increasingly oversold conditions earned DMRC a further
PowerRatings upgrade to 9.
Here is how adding the intraday entries strategy to PowerRatings
Before trading begins on September 6th, the intraday entries
strategy says to place a limit order between 3-7% below the
previous day's close (the day of the upgrade to 9). If the stock
does not pull back further, then the trade will not be filled. But
if the stock does pull back further, the trader is able to take a
position at a very oversold level, a level from which the stock has
tended to make significant short term gains, historically
Using a 3% intraday entry level, for example, a trader would
have been filled on September 6th near the lows of the day at
Once in, how does a trader get out? Our research provides for a
number of different exit strategies. But one of simplest, most
effective and most dynamic exits is a close beyond the 5-day moving
In the case of our hypothetical Digimarc Corporation swing
trade, the exit signal would come swiftly as shares of DMRC rallied
by more than 3% the following day to close above the 5-day moving
But for the trader who used an intraday entry strategy the
theoretical gains would be even larger. Taking a position intraday
on the 6th at 30.77 and exiting on a close above the 5-day moving
average a day later, this swing trader would have realized a gain
of more than 8%.
A good gain of more than 3% compared to a great gain of more
than 8%. Just by adding the intraday entry strategy to
If you are looking for the kind of stock lists that are based
on quantified research rather than the opinions of analysts and
pundits, then you owe it to yourself to learn more about
PowerRatings. To start your free, no-obligation trial to
PowerRatings - including stocks, ETFs and leveraged ETFs, visit
our PowerRatings page at the link below.
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is Editor in Chief of TradingMarkets.com