Trading With Uncommon Sense
Stockscores.com Perspectives for the week ending June 1, 2014
In this week's issue:
In This Week's Issue:
- Stockscores' Market Minutes Video - Trading Economics
- The Trader's Edge - Gold and Uranium Bounces, Which Are Real?
- Stockscores Trader Training - Trading With Uncommon Sense
- Stock Feature of the Week -
Stockscores Market Minutes Video
Trading success is not about being right, it is about how much you make when you are right. Learn this lesson on Trading Economics. Watch the video by clicking here.
The Trader's Edge
Ugly week for the Gold Miners as Gold broke through some support and headed sharply lower. Most of the group has already been moving down for the past couple of months so this down draft appears to be the exhaustion of the short term downward trend. With Gold approaching support at the very long term upward trend line, I think there is a good chance we see a bounce back from oversold conditions next week. Some of the more actively traded Gold Miners started that bounce on Friday, managing to close above their open and even up in some cases. Short term traders should look for buying opportunities but those with a longer term time horizon should be patient and wait for better signs of a turnaround. At this point, a bounce for the short term is all that is expected.
Uranium stocks showed a little bit of life this week and probably attracted a few investors to bottom fish stocks in the group. I think it is still too early to get optimistic, the rally in the Uranium Participation Unit (T.U) only took it back up to the downward trend line but not through it. A step in the right direction if you are a Uranium Bull but not yet a step that is profound enough to call a trend reversal. Watch the sector, but stay cautious.
Canacol Energy (T.CNE) announced the closure of a $125 Million bought deal financing at $7.90 share which was followed by a target price upgrade by Canaccord to $12. The stock closed the week at $7.21 on Friday, below the financing price, so the bankers have some incentive to get the share price up. Good long term trend still intact, I like the stock at this price level. T.CNE is one of my feature holdings on Tradescores.com Alerts.
Prometic Life Sciences (T.PLI) has been a top performing stock over the past two years but has succumbed to profit taking over the last 3 months. With US Biotechs (IBB) stabilizing, we could see this stock work its way back to the old highs, making it a stock to watch for traders.
Stockscores Trader Training - Trading With Uncommon Sense
So often I see people make decisions in the market on what makes sense to them. It makes sense to buy stocks when the company insiders are buying. It makes sense to buy stocks that are making positive announcements. It makes sense to listen to what the President has to say about the company's prospects. However, all that matters is what the market thinks of the company and whether the buyers are more motivated than the sellers. So often, the market does things that do not make any sense until we later learn of what motivated the market to do what it did. Remember, the market is forward looking, what happened in the past rarely matters.
Never average down on a losing position
Buying more of a bad thing is not much different than continually betting on a losing horse. Winners win for a reason, and until your stock starts to show that it is a winner, don't add more to a bad situation. If you like a company, whose stock is losing you money, sell it. You can always buy it back later when the market starts to like it again.
Successful investing is not about being right, it is about making money
Most good traders are usually wrong. They will lose small amounts often and make big amounts occasionally. (watch this week's Stockscores Market Minutes video for more on this, http://youtu.be/b15iXI90e1g) What matters is how much they make over a large number of trades. Don't try to always be right, simply work to make money.
Resist doing what feels comfortable
We have a tendency to look for the market to prove our decision is a correct one before we make our move. The problem is that this often means we are too late to capitalize on the opportunity. We have to move before the crowd, and that often feels like a dangerous thing to do.
Anyone can get lucky in the short term, only good traders succeed in the long term
Don't confuse making money in the stock market with knowing what you are doing. It is easy to get lucky on a stock or on a sector and enjoy gains that give credence to your analysis method. However, short term winners often give back all of their gains because they fail to recognize their success as luck.
Be patient with your winners, not with your losers
The natural tendency is to sell your winners too early and hold on to your losers, hoping for a turnaround. A simple, but not easy, thing to do is reverse this tendency. When the market proves you right, wait to sell on a signal that indicates the stock is likely to go lower. When the market proves you are wrong, let the trade go and take the loss.
Publicly available information is priced in to the stock, don't rely on it to make decisions
Once information, no matter how good, is made public, it loses its usefulness to you.
Public information is priced in to the stock by the market of investors. Information only has value to you if the market has not priced it in.
Make sure your trading strategy has an edge
A trading strategy is only worth trading if it can be shown that it consistently makes money. Establish your trading rules and test them over a variety of market conditions so you know that it is effective. Time spent testing a strategy to prove it is a money maker can save you a lot of money in the market.
People lie, markets don't
I have learned the hard way to never trust what people say, their actions say much more. Learn to read the market and understand it's message. No matter how much insight a person may have, recognize that they have a bias based on their own emotional attachment to money.
It is easier to trade with the trend than against it
Understand the mood of the market and trade with it. Don't chase euphoria, but seek to buy stocks that are in the control of the buyers. Don't sell on fear, but seek to sell stocks that are under seller control.Back To Top
This was a slow week, the US markets were closed on Monday and that meant that volume was light throughout. While the indexes made gains, there were not many standout stocks. That made it hard to find stocks worth considering for trades, I have one feature below:Back To Top
1. T.CQE
T.CQE is a return to a recent trade, a stock that made a very nice breakout in February when I first featured it. The stock went in to profit taking mode through May but this week's performance indicates that it is likely breaking that profit taking phase with a good potential to move up toward $4. Support at $2.55.
Back To Top
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.
Back To Top
|
