The market is offering a good setup to short-term traders. Friday's reversal may have defined a short-term cycle low. A number of good stocks have rebounded off major moving averages, trading range bottoms, and support levels. If they follow through, and external events do not cause concern in the stock market, a good gain of several percent is possible in many cases.
This is a good time to look for trade candidates that have a number of factors in their favor. You may find yourself with a number of good trade possibilities, and your biggest problem will be to decide which one or two to go with. Let's look at one good setup.
ADP had a 9-day, 3.5% pullback, from new highs to the 50-day moving average (pullbacks in ADP average 5.1% over 12.9 days, so this is close to an average retreat to a short-term cycle low). Stochastics look ready to produce a buy signal, although it will be above the deeply-oversold area.
ADP caught my attention last week because of its track record for this time of year. Over the next 13 weeks, ADP has gained an average of 7.3%, with gains in a very high 90% of the years. But notice that over the most recent 25 years there has been only one loss. This is a 96% track record. You won't find that in Apple's (AAPL) track record.
ADP pays a 2.4% dividend, and you will get the next $0.48 a share dividend if you are holding the stock on September 12th. ADP has averaged an 8% increase per year in its dividend, and has increased dividends for 38 consecutive years. You won't find that with Apple (AAPL).
Setups like this are often the ones you discover too late and ask yourself why you didn't spot it right at that rebound off the 50-day MA. There are no guarantees in the stock market, and news events could quickly derail this market's, or ADP's, rebound. But you've got good fundamentals, a good technical setup, an exceptionally strong seasonal pattern, and a confirming cycle pattern.
Today's Seasonal Forecaster has not only an alternative trade to buying ADP stock, that could return 23% or more in two weeks, but also two other stocks with similar setups.
Of course, there's much more you need to know and many more stocks you can capitalize upon each and every day. To find out more, please click on the following link: www.markettamer.com/seasonal
Copyright (C) 2014 Stock & Options Training LLC
Unless indicated otherwise, at the time of this writing, the author has no positions in any of the above-mentioned securities.
Gregg Harris is the Chief Technical Strategist at MarketTamer.com with extensive experience in the financial sector.
Gregg started out as an Engineer and brings a rigorous thinking to his financial research. Gregg's passion for finance resulted in the creation of a real-time quote system and his work has been featured nationally in publications, such as the Investment Guide magazine.
As an avid researcher, Gregg concentrates on leveraging what institutional and big money players are doing to move the market and create seasonal trend patterns. Using custom research tools, Gregg identifies stocks that are optimal for stock and options traders to exploit these trends and find the tailwinds that can propel stocks to levels that are hidden to the average trader.
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