10 Ways To Think Differently About Stocks
Stockscores.com Perspectives for the week ending June 14, 2014
In this week's issue:
In This Week's Issue:
- Stockscores' Market Minutes Video - Trading in the Channel
- The Trader's Edge - Gold and Energy Strength, Will It Last?
- Stockscores Trader Training - 10 Ways To Think Differently About Stocks
- Stock Features of the Week - T.SGY, T.DGC
Stockscores Market Minutes Video
When looking to buy strong stocks, buy them when they have pulled back to the bottom of their channel rather than chasing them at the top. This topic plus Tyler's regular weekly market analysis, watch the video at http://youtu.be/Q6mGk9qagaA
Live Webinar Tuesday June 24 6:30PT, 9:30ET
An Introduction to Active Trading - This free webinar will highlight the tools and processes used to actively trade the stock market using the Stockscores strategies. If you have ever thought about making trading a full or part time occupation, this webinar should not be missed. Stockscores founder Tyler Bollhorn will show what he does each trading day to find and execute his trades. Register at https://attendee.gotowebinar.com/register/6772855646720316162
The Trader's Edge
Gold rallied this week and that helped the Gold miners surge higher. The strength is encouraging and a positive sign that the long term upward trend in Gold will be held. However, last week's strength is not yet sufficient to break the downward trend line that has been in place since mid-March. These stocks are worth considering for short term trades but it is not yet appropriate to take a longer term Bullish view, there is more work to be done for the sector to turn around.
Energy has been the hottest sector and it got an extra shot of enthusiasm this week with the spike in Oil prices caused by the violent uprising in Iraq. This has caused the Energy stock sector to move in to a parabolic upward trend. This heightens the risk of a pull back as investors will eventually take the emotion out of the market, causing it to come back to its linear trend line. No sign of weakness yet so remain Bullish on the sector. However, I expect that profit taking will come soon.
The strength in these commodity sectors helped the TSX Venture listed stocks catch some bids this week; this trend could continue and help investors take an interest in the junior commodity stocks again. A turnaround is still far from certain so don't be too aggressive with the group yet.
Where has the action been for speculative stocks? Last week, it was in a few Biotech and small cap Technology names. After a big pull back in March and April, these stocks are doing well in June.
Stockscores Trader Training - 10 Ways To Think Differently About Stocks
You cannot expect to do well in the market if you look at investing in a normal way. By definition, being average is doing what most other people do and since investing is largely a psychological game, doing what other people do is only natural. Average results come from normal people acting in normal ways.
To beat the market, you have to be different.
Not necessarily in a straight jacket bouncing off padded walls different, just a little off.
Here are 10 things that may help you be a better investor, some ways to think differently from the crowd in that pursuit to achieve market dominance.
1. Do not think about making money, think about losing money - the first step toward success is accepting that losing is part of trading. You will not be right all of the time, you can not always trade your way out of a bad situation. There will be times when you simply have to walk away with a loss. The key is to keeping the losses small and manageable. When the market proves you wrong, take the loss.
2. Do not think you can average down to win - it is a logical idea, add more to a losing position with the expectation that the market must eventually go your way. Many times this strategy will work but, when it does not work, the loss may be insurmountable. The market does not eventually have to go your way.
3. Do not think that your success is entitled - you may make a great trade, pick a really great stock and have a feeling like you really have the market figured out. Forget your gloating, no one ever has the market figured out. We must always remember that we have to work as smart for the next trade as we did for the last.
4. Do not think that talent is required - making money in any trading endeavor is a small part technical skill and a big part emotional management. Learn to limit losses, let winners run and be selective with what you trade. Emotional mastery is more important than stock picking skill.
5. Do not think that you can tell the market what to do - the market does not care about you, it does not know that you want to make a profit. You are the slave, the market is your master. Be obedient and do what the market tells you to.
6. Do not think you are competing against other traders - trading success comes to those who overcome themselves, it is you and your persistent desire to break trading rules that is the ultimate adversary. What others are doing is of little consequence, only you can react to the market and achieve your success.
7. Do not think that Fear and Greed can ever be positive - in life, fear can keep us from harm, greed can give us the motivation to work hard. In the market, these two emotional forces will lead to losses. If your decisions are governed by either or both you will most certainly find that your money escapes you.
8. Do not think you will remember everything you learn - every trade provides a lesson, some valuable education on what to do and what not to do. However, it is likely that your lessons will contradict one another and lead you to forget many of them. Write down the knowledge that you accumulate, return to this trading journal so that you can retain some value from the lessons taught by the market. Remember, the market is cruel, it gives the test first and the lesson after.
9. Do not think that being right will lead to profits - you may be exactly right about what the fundamentals are and what they are worth. However, timing is everything, if your expectations for the future are ill timed, you may find yourself losing more than you can tolerate. Remember, the market can be wrong longer than you can be liquid.
10. Do not think you can overcome the laws of probability - traders tend to be gamblers when they face a loss and risk averse when the have a potential for gain. They would rather lock in a sure profit and gamble against a probable loss even if the expected value of doing so is irrational. Trading is a probability game, each decision should be made on the basis of the best expected value and not what feels best.
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Investors are still showing a reluctance to buy the really speculative small and microcap stocks. This week, I did the Stockscores Simple Weekly Market Scan and inspected the three year weekly charts of the companies that came up from the scan.Back To Top
1. T.SGY
T.SGY has been pushing against $7 resistance for 8 months but was able to break through that price level this week. Historical yield is at 7.85% and the stock looks more likely to move higher than lower in the months ahead.
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2. T.DGC
T.DGC has been outperforming the broader Gold miner sector and with strength in Gold this week, T.DGC was able to break out through $12 resistance. The stock looks like it can move up in to the $20 - $25 range in the months ahead as long as support at $10 is not broken.
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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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