When stocks are falling sharply, the idea of selling short looms
large in the minds of most swing traders.
The problem is that the best time to think about selling stocks
short is BEFORE they start selling off, not after.
This is why so many traders underperform. By the time enough of
their indicators agree that stocks are moving down, they often have
already traveled significantly lower. This puts swing traders in
the difficult position of having to decide whether or not to
"chase" the stock as it moves further and further away from
With PowerRatings, traders can take positions in stocks BEFORE
they make their big moves. And this is true both for traders
looking for stocks to buy as well as traders looking for stocks to
) , a technology company that is a player in the 3G/LTE networking
business. The stock had been climbing below the 200-day moving
average, becoming increasingly overbought and earning major
PowerRatings downgrades. On August 26th the stock was downgraded to
2 and just one day later the stock earned a further downgrade to 1,
our lowest grade.
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Traders who began looking for opportunities to short Ixia over
the final trading days of August were rewarded on August 30. By
using a limit order 3% above the close of the day when XXIA earned
its downgrade to 1, swing traders were able to get short XXIA at
very overbought levels.
And traders did not have to wait very long to take profits,
either. Shares of XXIA gained for an additional day, but sold off
sharply on the following session, dropping by nearly 4%. This move
lower enabled trader who had gotten short the stock days ago at
higher levels to cover their positions, buying the weakness at
significantly lower levels.
If you are looking to add quantified, short term stock
trading to your overall swing trading portfolio,
to learn more about PowerRatings. Featuring top stock lists for
the S&P 500, Dow and Nasdaq 100, our PowerRatings stock lists
will make it easier than ever to find the best stocks to trade
is Editor in Chief of TradingMarkets.com