Direction for the Less Active Trader
Stockscores.com Perspectives for the week ending February 7, 2010
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Toronto Investment Show
Stockscores.com founder Tyler Bollhorn will be speaking at the Toronto Investment Show Feb 13th and 14th at the Fairmont Royal York. For more information, Click Here
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This game is unique, we recommend you read the How To Play document and watch the videos from this link to learn how the game works.
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In this week's issue:
Stockscores 3 Day Live Class
Toronto March 28 - 30
Calgary April 25 - 27
Vancouver May 16 - 18
Due to the high demand for these classes, we will open registration with a special email to anyone that expressed an interest over the past week. This will be sent on Tuesday February 9th. If you would like to receive this email and have not already sent us an email expressing your interest, please send one to tylerb@stockscores.com.
The registration email will have details on what will be covered over the three days and pricing.
The focus of last week's newsletter was on shorter term, active trading but that is not all that I do or teach others to do. You can adapt the same methods of short term trading to a longer term chart and improve the performance of your retirement portfolio.
The Stockscores Approach is based on the idea that every bit of fundamental information is priced in to the stock. The market is so efficient that it not only prices in public information but also the rumors and private information that tends to lead the market. By learning some simple methods of chart analysis you can separate promising stocks from the bad and manage risk effectively.
The nice thing about how I do my stock research is that, once learned, it does not take a lot of time. A stock can be analyzed in seconds instead of hours. Opportunities can be found in minutes. This is because you can read all information that is available on a stock in one picture. Doing so requires an understanding of six characteristics of chart patterns.
Optimism
Pessimism
Support
Resistance
Price Volatility
Abnormal Activity
When I teach people to trade, I first focus on these elements, one at a time, so that they can be all understood well by themselves. We then combine them to enable an understanding of what makes chart patterns predictive and useful in analysis. It is as simple a method of analysis that I know and it can yield results unrivalled by what most people are doing.
But investing in the markets requires more than just a good method for picking stocks. Risk management is even more important, without good risk control a portfolio can suffer financially and mentally debilitating losses. Every time we trade, we must plan to lose. We must know the point where the market has proven the trading idea wrong and get out with a loss that is manageable.
For the longer term investor keen on managing risk, it is also important to focus on investment vehicles that are less likely to make huge price swings on surprise news announcements.
The great leap forward for individual investors in the past few years has been the introduction of Exchange Traded Funds (ETFs). Today, these are the most popular stock market investments. Each ETF represents a basket of stocks, a commodity, a currency, bonds or some other class of investment. By bundling them in to an ETF, any investor can trade that instrument through the stock market.
Consider how much simpler it is to buy the S&P 500 ETF than it is to buy all 500 stocks that make up the S&P 500 or even the S&P 500 Futures. If you think the overall market is going up, you buy the SPY. If you think it is going down, you can short the SPY. There are now so many ETFs out there that most investment ideas can be traded through an ETF.
Within the new Stockscores Trading Desk, I have created "Sectors" of ETFs that you can consider using the chart viewer. The Stockscores Trading Desk will soon be integrated in to the normal Stockscores web site but for now you can use it by going to http://tradingdesk.stockscores.com. The first time you visit you will be required to convert your existing Stockscores.com username to your email address, which you will then use to log in for future visits.
For the longer term, passive investor, these are a great option because they mitigate much of the risk of individual stocks through diversification.
However, all investors need to have a method for controlling risk. The past few years has taught that lesson well; there is no such thing as a "safe" stock
The upcoming 3 day trading classes that I will be teaching in Toronto, Calgary and Vancouver will include methods for identifying and trading longer term opportunities. I will teach some specific, simple strategies for trading the Exchange Traded Funds and individual stocks and demonstrate some tools that will be shorten the time it takes to analyze and identify opportunities. If you would like information on this class, please send an email to tylerb@stockscores.com and we will put you on the list for the registration package that will be emailed on Tuesday.Back To Top
This week, I went through some of the Exchange Traded Fund sectors found on the new Stockscores Trading Desk (http://tradingdesk.stockscores.com). I viewed the charts, looking for good pattern set ups, and found a couple of trading opportunities that should pan out over the next couple of weeks, provided they don't close below the stated support indicated below:Back To Top
1. T.XEG
The Energy Sector has been selling off for about a month but hit support Friday and bounced back from morning weakness. I think T.XEG can probably do well in the short term as the sellers lose their motivation and the buyers do some bargain hunting. Support at $17.
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2. SMH
The SMH has pulled back to its old trading range where it should find strong support and may be able to break the downward trend line. I like that it was able to close near the high of the day on Friday after starting the day with weakness. Don't expect a lasting trend but there should be a trade to the upside here provided support is not violated at $24.40.
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References
Get the Stockscore on any of over 20,000 North American stocks.
Background on the theories used by Stockscores.
Strategies that can help you find new opportunities.
Scan the market using extensive filter criteria.
Build a portfolio of stocks and view a slide show of their charts.
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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