Photographer: Michael Nagle/Bloomberg
The market direction in the next week is unclear. In terms of wave formation, a fifth wave to the downside appears due. However, the sentiment is so bearish that contrary logic can be applied. The market appears ready to rise over the short term. This makes stock selection over the near term difficult. Here are one long and one short recommendation.
Here is a screen of stocks that have performed best in the coming period. To select some shares for short-term trades, the following strategy is employed. The best-performers in the chosen time period with at least 20 years of price data are calculated and are presented below. The issues are ranked by the percentage of time periods in which the stock rose.
Bullish NASDAQ Stocks from February 6th to 13th
These stocks have traditionally been the best performers in the coming week.
From this list, the stocks or ETFs are screened for relative strength and by dynamic cycles. The latter term refers to the most active cycles that are generating profits now.
Cognizant Technology Solutions is number three on the screen. The stock has risen almost 70% of the time in the coming week over the last 23 years. The expected return has been 3.75%. Technically, the stock is strong; relative strength has been rising. February has been one of the strongest months of the year, rising more than 62.5% of the time. Shares could rise closer to $95.
Chart 1
Relative strength has remained strong.
From the list of the weakest S&P 500 stocks, we see that Macerich has declined almost 66% of the time in the next week over the last 27 years. The average gain was 0.22%. This has been the weakest time span in any year. The stock has declined 52% of the time between February 10th and March 3rd. Relative strength has been falling since November and hit a new low on Friday. The share price is due to fall below $15.
Chart 2
Relative strength has hit a new low.
