2009 Looks Better Already
Stockscores.com Perspectives for the week ending January 4, 2009
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| Upcoming Events |
See Tyler Bollhorn at These Events
Tyler Bollhorn will be speaking at the following events:
Toronto Financial Forum - January 16th and 17th
Vancouver Resource Show - January 25th and 26th
Vancouver World Outlook - February 6th and 7th
Vancouver Financial Forum - February 27th and 28th
Calgary Financial Forum - February 13th and 14th
Upcoming Stockscores/DisnatDirect financial seminars will be announced soon, check the Upcoming Events area of Stockscores for details soon.
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In this week's issue:
Happy New Year! 2008 was a trying year for most although savvy traders with the discipline to limit losses found it a great year. The volatility and liquidity in the last quarter was almost beyond belief. I believe there are great opportunities to start 2009. It is a normal emotional reaction to want to stay away from the stock market after the losses that were incurred in 2008 but the crash is the very thing that provides opportunity. Most people run away from the stock market when it is on sale and clamor to own stocks when prices are at a premium. Don't be normal, avoid this emotional trap and get trading! The best opportunities come when it is hardest to make the trade.
With that said, it is absolutely essential to be disciplined and manage risk effectively. This is the absolute hardest thing to do because it is so easy to let our emotions get the better of us. I have traded for 20 years and I still suffer emotional breakdowns from time to time. But, if you can gain mastery over your fear and greed and stick to the basic theories of trading, you can do well.
Over the past few weeks I have reviewed the basics of trading in the Market Minute Videos which are free to watch each week from the home page of Stockscores. This week I look at the Exit Decision but if you missed the first two installments, click on the links below and you can watch each of the short videos in the series.
The Entry Decision
Risk Management
The Exit Decision
I am going in to the fourth and final week of vacation in Maui, such is the life of a trader! I am actually writing this from a comfortable chair poolside as I stare out at the blue Pacific. As Chris Rock says, "Don't hate the player, hate the game."
When I get back home I will begin to do a number of presentations at various financial shows and seminars starting with the Toronto Financial Forum on January 16th and 17th and then some Stockscores/DisnatDirect seminars on the 19th and 20th in the Toronto area. Location details and times will be in the Upcoming Events area of Stockscores very soon.
One announcement that I want everyone to take note of is that I will be teaching a live class in Toronto on February 21st. The class is open to any client of the DisnatDirect brokerage. I used to teach this class a few times a year, last year I taught it twice but this year we have only planned one date. I get a lot of requests from people wanting to attend this class and I have had to turn most away so if you have been waiting, please consider this date. For information on how to take advantage of the special offer from Disnat Direct to get the StockSchool Pro course for free and to be eligible to attend this live class for free, Click Here.
I will also be doing some presentations in Vancouver, Calgary and possibly other Canadian cities on behalf of DisnatDirect through January, February and March. However, Toronto will be the only Live Class date so some of you may have to make a trip. However, since Disnat pays the bill for me to teach the class, the price is right to attend if you are one of their clients!
I want to again stress that I think 2009 will be a good year for traders who have the discipline to manage risk effectively. Be patient for good trade set ups and when the market proves you wrong, get out and take the small loss. I know it is a hard thing to do but if you change your outlook from a focus on each trade to a focus on the big picture of managing your portfolio, you will realize how smart it is to take this approach. As we go through 2009 I will continue to try and help each of you with trading tactics that make money. Trading the stock market is simple, but not easy, hopefully I can help you keep it simple and lucrative.
Best Wishes for 2009.
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Traders should always work to fit their strategy to the market since the market can not be changed and it will overpower you if you are trading it the wrong way. To do this, we must first understand what the market is doing.
This sort of analysis is what I do in the daily edition of the Stockscores newsletter, which can be subscribed to for $29 a month (go to Products, Newsletters on the site for a free trial). However, to start this year I thought it would be helpful to do this analysis here.
The market has been guided by fear of late, collapsing asset prices have pushed people out of stocks and in to cash which they tend to park in safe bonds. This has meant that Treasure bond prices have skyrocketed while yields have fallen. At the same time, the US dollar got very strong as people consider the US dollar the safest currency in the world, despite the huge debt that the US carries. That is the benefit of having a powerful military.
However, some optimism has started to come back to the market in recent weeks and we are beginning to see money come out of safe havens and in to assets again. Take a look at the chart of the US 30 Year Treasury Bond Futures, symbol US/09H. Its upward trend was broken over the last two trading sessions. The upward trend in the US Dollar index was broken early in December (DXY0) and now we are seeing some strength coming in to equities.
The Materials sector is attracting money first; we have seen good gains in commodity based stocks outside of the Energy sector. The Energy sector is beginning to turn around but it is not there yet so I would still be cautious with Oil and Gas stocks. Commodity based stocks benefit from a weaker US dollar since most commodities are priced in US dollars and get cheaper for those buying from outside the US.
I ran the Stockscores Simple Market Scan and found a greater number of candidates than I have seen in a long time. The charts are almost all the same; a recent break of the downward trend and the formation of a rising bottom consolidation that is now testing or breaking short term resistance.
There are an abnormal number of stocks from the Materials sector in the Market Scan results, confirming the "state of the world" described above. Here are some stocks that I think are worth considering, keep in mind that if the US dollar does fall it will be better to buy Canadian listed stocks where possible. Many of the stocks are listed in the US and Canada.
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1. T.CCO
Cameco is listed at T.CCO on the TSX and CCJ on the NYSE. The Stockscores are better on the TSX because of the relative strength of the Canadian dollar. Friday saw a break through short term resistance, albeit on light holiday volume. Ideally, I would like to buy it on weakness; I think there is a good chance it pulls back to $17 - $18 range before it tries to work higher. Support is at $15.25.
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2. SGR
SGR is showing a classic Bottom Fishing set up with a break from a short term ascending triangle consolidation, a sign of optimism out of a downward trend. Support at $18.25.
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3. PCU
PCU is another chart showing the Bottom Fishing chart pattern set up, breaking from short term optimism out of long term pessimism. I would prefer to own it on a pull back to support at the short term upward trend line, hopefully we get the chance as it has good potential to rally to the longer term downward trend line. Support at $13.75.
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References
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See which sectors are leading the market, and their components.
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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