Here is a Powerful Way to Trade News

Today's PowerRatings article will focus on Rule #10 of TradingMarkets 10 Rules For Trading. Rule #10 says: Trade news...but not like everyone else.

Watch the way the market or a stock reacts to the news. Stocks which are above their 200-day moving average that go up on bad news are likely going higher. Stocks which are below the 200-day and drop on good news are likely heading lower. The rule is if they can't go up on good news they're likely heading lower. And if they don't go down on bad news there is a very good chance they're going higher.

One of the most important factors that drive stock prices is earnings, so we should track how they react to earnings. Each day we publish 2 crucial lists:

1. Stock that Dropped on Better Than Expected Earnings- These are stocks that announced better-than-expected earnings and dropped on the day. Such market action may indicate a fundamental change in the outlook for the stock.

2. Stocks that Rose on Worse Than Expected Earnings- These are stocks that announced worse-than-expected earnings and rose on the day. This market action may mark a change of direction for the stock.

Here are today's scan results:

These stocks should be kept on watchlists and monitored for favorable changes in PowerRatings and price action.

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Darren Wong
Associate Editor
darrenw@tradingmarkets.com

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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.