Stocks Overbought
Stocks Overbought
3 ways to predict the future of stock movements
1. History shows us that past moves in U.S Equities can help us predict and gain future success. I have been researching moves that a stock makes right before and after earnings. The stock market is seasonal and earnings prove that. Let us take a dairy and fish farm in China for an example… they will produce true results only in the season that they can fish and milk their cows. Therefore the stock doesn’t really move until before that season, and you can be ready for that. Take farmers in Indiana… in the winter they really don’t do anything but prep for the spring and summer months to start farming and when corn is knee high by the fourth of July then they reap and sell.
The up and coming play is POT which starts in 2 days as far as history shows us that POT has been up 9 of the last 10 years and their
Average Return has been 3.58% over a period of 2 weeks. July 30 – Aug 13. This is right before earnings. This doesn’t mean that it is guaranteed to move but the probabilities are stacked much higher in your odds.
Another example is that GE has been down 3-6% 10 out of the last 11 years in the month of June.
I have a whole load of stocks that I have done research for and that every month the trend changes! My trading universe is determined by what is marked on my calendar for that 1 week, 2 week, monthly etc. I have a strategy that further outlines this method but that is not to be mentioned in this educational piece.
2. The second thing that you can use is yourself and your emotions. The market is not about trading without fear. The market can and is a scary place, it is real money at risk. It is OK to feel fearful. However there is money flowing their everyday and I want to teach you how to reach in with both hands to extract that cash! When you are feeling fearful identify with that, start writing down what it is that is bothering you. Step away from the computer and shut it down. It is when traders fear about losing money or fear missing out on opportunities when they start making all sorts of mistakes and losing money. The market gives you a 50/50 chance to win and if you are fearing then the probabilities of the stock going against you are very high. I have found that traders that make 100 trades per month win 52 out of 100 times and lose the other 48. There are 4 trades in their whole book that set their Profit and Loss for the month. These 4 trades make the SIGNIFICANT difference in their portfolio! Gain or Loss! It is what you do with your winners and what you do with your losers that set you apart from the rest of the traders in the world!
3. The third way to predict stock movements is to primarily look at the direction the overall market is going. If it is trending up all day then it would behoove you to be long. In this market when the day is choppy, I don’t even trade. There is no point in letting the market makers take your money as they chop and accumulate all day for the next day when the market sells off or rises. When the market is trending down all day it would behoove you to be short. This can be a tough thing for certain folks but I have found the fastest money to be made is being short. The reason for this is because FEAR is a lot more powerful than greed. When the market is getting long and put/call ratios are low (bullish) and stocks are chopping in the morning after and initial 50 point morning move in the DOW, I start to purchase and wait for the afternoon move. If the market holds through lunch I become more convinced of my long position. If it fails me I am out with no more than half a percent loss. This is just an example of how I trade on a Long trending day.
Here is an example of how you could setup your charts to trade in this choppy and volatile market. Or even if you applied our earnings research and wanted to enter the stock perfectly in order to ride it either way you were trading. If it is earnings plays refer to the swing setup below. If it is Day-Trading or Scalping refer to the time reference for Day-Trading below.
SET UP YOUR CHART: Ensure first that you have a good real-time streaming chart-package we can provide that along with our course if you don’t already have it, and make your chart-settings as follows:
(1) Time Period: For DAY-Trading, 30 minutes or one hour; for SWING- Trading, 3 days or longer
(2) Chart Style: CANDLESTICK
(3) Chart Frequency: For DAY-Trading, one minute; for SWING-Trading, 10, 15, or 30 minutes
(4) Upper Indicators: EMA (9 period) and BOLLINGER BANDS (20 period)
(5) Lower Indicators: MACD (12, 26) and RSI (14) and volume
Now you’re ready to proceed….. There are three essential components of this set-up:
For quick profits with a Triple-Whammy Perfect BUY (Buy-Low-then-Sell-High; or Buy-to-Cover Short-Sell), these three legs are as follows:
(1) The candlesticks will violate the lower Bollinger Band.
(2) RSI must fall into OVERSOLD territory, under 30, and preferably in DEEPLY OVERSOLD territory, under 20.
(3) The MACD (blue) line must be under the signal (red) line, and falling; and then must turn back upwards and cross the signal line. The crossover is the final confirmation — but if the turn upwards is sharp enough, you know it’s getting ready to do a crossover, so it’s best to go ahead and act, if the prior two conditions are already in place.
For quick profits with a Triple-Whammy Perfect SELL (ShortSell-High-then-Buy-Low; or Sell-to-Close Long Position), these same three legs are as follows:
(1) The candlesticks will violate the upper Bollinger Band.
(2) RSI must rise into OVERBOUGHT territory, over 70, and preferably in STEEPLY OVERBOUGHT territory, over 80.
(3) The MACD (blue) line must be above the signal (red) line, and rising; and then must turn back downwards and cross the signal line. The crossover is the final confirmation.
Utilizing this technique, you can comfortably and very profitably trade any stock, multiple times during each day, entering and exiting both Long and Short positions at the perfect points, and extracting amazing profits from the massive stream of money flowing constantly between those two Bollinger Bands. For more information please visit www.csquaredtrading.com
Retail Sector Analysis Short Overbought Retail Stocks
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The Swing Traders Bible: Strategies to Profit from Market Volatility (Wiley Trading) $38.35 The Swing Trader’s Bible provides traders with different strategies to capitalize on market fluctuations. The majority of the time, most markets move sideways, with no discernible long-term up or down trend. The key to making money in these kinds of markets is to sell when the market is near the top of its range and buy when it’s near the bottom of its range. The authors explain how to use fundame… |
