There are plenty of old adages on Wall Street…
“Buy low & sell high.”
“It’s a market of stocks, not a stock market.”
“Sell in May, and go away.”
Some hold true, and some don’t.
One that really holds true for me is, “The trend is your friend.”
But some trends are more powerful than others…
And that’s what I want to talk to you about today.
For example, have you ever heard of a “Power Trend”?
Coined by Investor’s Business Daily, a Power Trend occurs when a stock is showing tremendous strength.
These stocks can make big, fast moves and deliver mouth-watering gains.
Of course, these are exactly the type of stocks we like here at Stock Surge Daily.
How to Spot a Power Trend
Like most stock screens, a stock must meet several criteria to be considered a Power Trend stock.
Rule #1: The stock’s low must be greater than the 21-day moving average (MA) for the past 10 sessions.
In other words, we want to see the stock holding above its 21-day MA for 10 straight days.
The entire day’s trading range should be above the 21-day MA line.
If it touches that line, it does not meet rule #1.
Rule #2: The 21-day MA must be greater than the 50-day MA for the past five sessions.
This one is pretty simple. The 21-day line should be above the 50-day line for at least five straight days.
Rule #3: The 50-day MA slope must be positive.
Again, this rule is not overly complicated.
Just look at the stock’s 50-day MA, and make sure it is sloping up, not down.
Once these conditions are met, you have a confirmed Power Trend that could lead to huge gains.
A Powerful Example
Here’s an example of a stock I put on the Feb. 28 Stock Surge Daily Watchlist.
As you can see, it continues to surge higher and has now formed a Power Trend.
The 21-day MA (blue line) was holding above the 50-day MA (red line).
The stock held above the 21-day MA for 10 straight sessions.
And the 50-day moving average (red line) was sloping upward.
Therefore, the Power Trend was confirmed.
Preferably, you want to see this action take place while the general market is trending higher.
That is where you are likely to see the biggest gains.
Of course, that’s not the case right now.
But as you can see, this structure can send stocks higher even under weak overall market conditions.
Embrace the surge,
Editor, Stock Surge Daily