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Stocks & Equities

The Hot Market

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Posted by Tyler Bollhorn StockScores

on Tuesday, 15 May 2012 07:21

perspectives commentary

The easiest way to make money is to trade the hot market. This rule applies to stocks, commodities, currencies, real estate, collectibles - anything that is traded between people. To put your odds for success at their highest, you have to trade where the action is.

Think back to when you had your best success. Perhaps you made great profits trading Silver stocks a few years ago. Maybe you made a fortune flipping houses 7 years ago. It is possible that many of you banked cash by shorting stocks or buying volatility last summer. No matter when or where it happened, your best and most memorable success likely came when there was a boom in the market you were trading. You rode a strong trend.

If you revisit any of those trades, trying to re-live the feeling of easy money, you have probably felt frustrated. Formerly hot markets are not much fun when they have gone cold. How does it feel to trade Silver stocks now or to own a number of homes that you cannot sell? Lousy!

Assets are worth owning when their price is going up. This seems obvious but it is amazing how many investors I meet who own stocks because they were going up in the past, not because they are going up now. There are a lot of investors living in the past.

We have to live in the now but how do we know where the next hot trend will be? How can we find the hot market today?

I often talk about how I never know anything about the companies that I trade, that I only trade symbols, but that is a little bit of hyperbole. I do have an awareness of the types of companies that I trade; I want to know enough to be able to see trends in capital flows.

Each day, I do a Market Scan on Stockscores to see which stocks have moved up more than expected. This tool has a filter for Abnormal Price Gain, an important distinction from just looking for %gain. One stock could make a 3% gain but, if the stock is quite volatile, that gain could not be abnormal. A 3% gain for Microsoft is very different than a 3% gain for a penny stock.

To be able to compare gain on a level playing field, we have to consider the gain in consideration of the stock's historical volatility. That is why we use the concept of statistically significant price gain. We want to find the stocks that are gaining more than we expect given how the stock normally trades.

When we scan the market for stocks that are making statistically significant gains, we will find stocks that are up more than expected but there is a greater message there. Some stocks will be up because they are part of a hot market. I pay attention to the company names and look for themes. If I see a number of stocks from the same sector moving up, I know that there is something going on in that market.

The market has been generally quiet in the past couple of months but there have been areas of the market that have done well. Shipping stocks had a run, Chinese companies did well for a few weeks and US retail stocks have done well for some time. Playing good charts in these strong sectors has paid off.

As you follow the stock market, maintain an awareness for the areas of the market that are showing a disproportionate amount of strength. If you hear a number of times about a sector of the market doing well, take notice. Follow the action and play the hot market. Doing so will have a significant effect on your performance.

perspectives strategy

The current market is somewhat trendless making it necessary to play stocks that are trading on their own story. In search of the Alpha factor, we look for stocks trading abnormally and breaking from good chart patterns.

I did a Market Scan for stocks making an abnormal day up with abnormal volume and trading at least 1000 times a day. This found 22 stocks, I inspected the charts and found the following had a good chart:

perspectives stocksthatmeet

1. XNPT: A good turnaround chart as this stock breaks from an ascending triangle chart pattern after recently breaking a downward trend line. With a stop at $4.25 you have a higher probability that the trade will work but a lower reward for risk ration. Raising the stop to $4.65 improves the reward for risk profile but at the expense of the probability of success. As long as you can handle the lower chance for success, I think the tighter stop is smarter.

Picture 3

References

  • Get the Stockscore on any of over 20,000 North American stocks.
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    Disclaimer
    This is not an investment advisory, and should not be used to make investment decisions. Information in Stockscores Perspectives is often opinionated and should be considered for information purposes only. No stock exchange anywhere has approved or disapproved of the information contained herein. There is no express or implied solicitation to buy or sell securities. The writers and editors of Perspectives may have positions in the stocks discussed above and may trade in the stocks mentioned. Don't consider buying or selling any stock without conducting your own due diligence.

 

 



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Stocks & Equities

Major Stock Indexes Flash Sell Signals

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Posted by John Nyaradi via Investor Insight

on Monday, 14 May 2012 08:33

May’s volatile stock market action has generated point and figure “sell” signals in all major U.S. indexes with the exception of the Nasdaq.

spx051212

.....read more HERE



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Stocks & Equities

Experience: 89 Year Old Legend Goes Bearish

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Posted by Richard Russell - Dow Theory Letters

on Friday, 11 May 2012 09:46

Hey, I don't like what I see on the Lowry's statistics. Buying Power (demands) has been slipping, and Selling Pressure (supply) has been creeping higher. The negative spread between the two has widened from a recent 130 to yesterday's 145. In the meantime my PTI, after forming a double top, has failed to go to a new high. Yesterday my PTI was 5 bullish by a mere 5 points. 

Verdict -- be OUT of all stocks and be very patient. I don't like the undertone of this market one bit; I think the stock market is under subtle and quiet distribution. Holding any stocks over time will be a loser -- so it's simple -- don't hold them; stay in cash and gold coins until I think of something better. I also like the Permanent Portfolio PRPFX, which is a reasonable place to park your assets. 

The market has been quiet for a while. I think something big is coming up, and I don't think it will be good. Caution is the watchword now. This is the quiet before the storm. I note that the VIX (the "fear index") has been quietly and slowly rising to where it is 19.55 today. The chart below of the VIX shows the VIX climbing above its 50-day moving average. MACD is giving a "buy" signal.

Yesterday I went to Costco for the first time -- to buy a pair of eye glasses. The place is amazing. It's built like an aircraft hanger or dome, severe, lots of room, high ceilings, no frills at all. At each long aisle there was some one handing out free food samples. I ended up eating a full free dinner, and it was good at that. I bought three pairs of eye glasses with frames for $375, about one third of what it would cost me at a La Jolla oculist.

Costco had just about every thing you can think of for modern living -- at bargain prices -- vacation trips, vacuum cleaners, pots and pans, deck furniture, awnings, flowers. I wondered whether this is the real trend of the future. Membership to Costco is fifty bucks a year for two people. Why would a person shop any place else? The only problem is quantity. Everything for sale from razor blades to Ensure to T-shirts to frozen burgers comes in quantities -- you can't get out of the place for less than three hundred bucks. Take a trip to Costco and you'll get an idea of how much sheer "stuff" is being manufactured in the world today. Who the hell is going to use it all? Hopefully 1.3 billion Chinese will use it.

Gold continues to be a maddening mystery. Yesterday, to the consternation of gold shorts, Dec. gold closed below 1600 (it did it again today). I'm increasingly convinced that the only safe way to own gold is in bullion coin form. In that way, you've got your gold and you're not tempted to trade it. You hold onto it, and you take it to your grave -- or give it to your kids or your sweetie. 

In that way, you own a position in gold (the size of which is up to you) and you forget about it. It's like a house that you like and that you own free and clear. You don't call your real estate agent every week to ask what your house is worth. You bought it, you like it, it's a source of pleasure, and you don't stay awake nights worrying about it.

Lately, I hear a lot of gold-naysayers boasting that "I own gold for insurance purposes only, although I'm certainly NOT a gold-bug." Of course, the same people feel happy as a lark when their gold goes up in price. 

I have subscribers who loaded up on bullion ten and even 25 years ago. They write to tell me that those purchases have changed their lives, although they never would have believed it when they were buying their gold at rock-bottom prices.

"Buy your gold and look away. Your buys will look brilliant some other day."

 

Interested in Subscribing? Go HERE

 

Russell began publishing Dow Theory Letters in 1958, and he has been writing the Letters ever since (never once having skipped a Letter). Dow Theory Letters is the oldest service continuously written by one person in the business.

Russell gained wide recognition via a series of over 30 Dow Theory and technical articles that he wrote for Barron's during the late-'50s through the '90s. Through Barron's and via word of mouth, he gained a wide following. Russell was the first (in 1960) to recommend gold stocks. He called the top of the 1949-'66 bull market. And almost to the day he called the bottom of the great 1972-'74 bear market, and the beginning of the great bull market which started in December 1974.

The Letters, published every three weeks, cover the US stock market, foreign markets, bonds, precious metals, commodities, economics --plus Russell's widely-followed comments and observations and stock market philosophy.

In 1989 Russell took over Julian Snyder's well-known advisory service, "International Moneyline", a service which Mr. Synder ran from Switzerland. Then, in 1998 Russell took over the Zweig Forecast from famed market analyst, Martin Zweig. Russell has written articles and been quoted in such publications as Bloomberg magazine, Barron's, Time, Newsweek, Money Magazine, the Wall Street Journal, the New York Times, Reuters, and others. Subscribers to Dow Theory Letters number over 12,000, hailing from all 50 states and dozens of overseas counties.

A native New Yorker (born in 1924) Russell has lived through depressions and booms, through good times and bad, through war and peace. He was educated at Rutgers and received his BA at NYU. Russell flew as a combat bombardier on B-25 Mitchell Bombers with the 12th Air Force during World War II.

One of the favorite features of the Letter is Russell's daily Primary Trend Index (PTI), which is a proprietary index which has been included in the Letters since 1971. The PTI has been an amazingly accurate and useful guide to the trend of the market, and it often actually differs with Russell's opinions. But Russell always defers to his PTI. Says Russell, "The PTI is a lot smarter than I am. It's a great ego-deflator, as far as I'm concerned, and I've learned never to fight it."

Letters are published and mailed every three weeks. We offer a TRIAL (two consecutive up-to-date issues) for $1.00 (same price that was originally charged in 1958). Trials, please one time only. Mail your $1.00 check to: Dow Theory Letters, PO Box 1759, La Jolla, CA 92038 (annual cost of a subscription is $300, tax deductible if ordered through your business).

IMPORTANT: As an added plus for subscribers, the latest Primary Trend Index (PTI) figure for the day will be posted on our web site -- posting will take place a few hours after the close of the market. Also included will be Russell's comments and observations on the day's action along with critical market data. Each subscriber will be issued a private user name and password for entrance to the members area of the website.

Investors Intelligence is the organization that monitors almost ALL market letters and then releases their widely-followed "percentage of bullish or bearish advisory services." This is what Investors Intelligence says about Richard Russell's Dow Theory Letters: "Richard Russell is by far the most interesting writer of all the services we get." Feb. 19, 1999.

Below are two of the most widely read articles published by Dow Theory Letters over the past 40 years. Request for these pieces have been received from dozens of organizations. Click on the titles to read the articles.

"Rich Man, Poor Man (The Power of Compounding)"

"The Perfect Business"



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Stocks & Equities

Marc Faber Sees A 1987-Like Crash Approaching

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Posted by Zerohedge.com

on Thursday, 10 May 2012 10:20

When given the opportunity to expand on his thoughts, Marc Faber, of the Gloom, Boom, & Doom Report, provides dismally clarifying detail on the state of the world. In this excellent (must-watch on a day when nothing changed but European stocks dead-cat-bounced) Bloomberg TV interview, the admittedly ursine Faber reflects on the US (slowing of revenue growth and the real linkages to European stress) noting that unless we get a huge QE3, there will be "a crash, like in 1987" noting he believes we have seen the highs for the year; on the likelihood of QE3 (agreeing with us that the Fed won't act unless asset markets plunge first); on Greece's exit of the Euro and whether policy-makers can manage the exit properly "bureaucrats in Brussels and the media are brainwashing everybody that if Greece exited the euro, it would be a disaster. My view is the best would be to dissolve the whole euro zone"; on the difference between investment markets and economic reality (thanks to financial repression); and on the global race-to-debase "I do not have a high opinion of the U.S. government, but the bureaucrats in Brussels make the government in the U.S. look like an organization consisting of geniuses. The bureaucrats in Brussels are completely useless functionaries".

To Watch the Video or Read More CLICK HERE

Marc Faber 2009 180



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Stocks & Equities

Metals Down, Miners Up — What It Might Mean

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Posted by John Rubino

on Wednesday, 09 May 2012 16:17

Gold and silver are down again today, but the mining stocks are up big. One day does not a trend make, but this is still a possible indicator of several things:

1) The plunge in mining shares has finally gotten the attention of investors who understand that most of these companies are viable and profitable, and that they won’t go to zero. So at some point the downtrend will stop, and though today might or might not be that day, it’s definitely coming. Downside risk, in other words, is now smaller than upside potential.

2) Share buyers are watching the mess in Europe and concluding that austerity is being replaced with monetary and fiscal ease. The European Central Bank will have no choice but to buy up trillions of euros of peripheral country debt to keep the eurozone together — or the currency union will fall apart and former members will go back to their old currencies and devalue aggressively. Either outcome is inflationary and therefore great for precious metals.

CLICK HERE for the 3rd Reason

Miners-outperform-May-20121



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