It’s been a challenge to keep up with the news lately. Since becoming President, Donald Trump has been busy and many of his actions have created emotional responses on both the right and the left. Viewing his actions as an investor, it’s important to take an unemotional perspective. Just like we have trouble making profits in the markets when we allow emotions to interfere with our judgement, it will be difficult to make profitable decisions about Trump’s policies when we allow emotions to get in the way. After the first few weeks of his administration, we can make a few assumptions ...
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Some traders seem to believe that if one indicator is useful, more indicators must be even more useful. Fortunately for them, they can quickly add indicators to a chart with a few clicks of their mouse. Unfortunately for the, modern technology allows traders to hide almost all of the useful information in a chart. You might think that’s a bold statement but let’s take a look at an example in the chart below.This chart includes a variety of indicators and shows Bollinger Bands, Andrews’ Pitchfork, stochastics, RSI and MACD. To analyze the chart, we could say that prices bounced off ...
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Last month, we applied a simple seasonal strategy to find potential buys for January. Now, we can review the results of this strategy. Of the 8 stocks, six moved up, a win rate of 75%. Half of the stocks beat the market, delivering a gain larger than the gain of the S&P 500 index. Results are summarized in the table below.This strategy outperformed because of the large gain in Illumina, Inc. (Nasdaq: ILMN). This demonstrates the value of trading a strategy. We never know whether a trade will be a winner or loser and we never know which stocks will ...
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As we all know, the election is long over and Donald Trump has now been sworn in as the President. These events have had a significant impact on investors. The S&P 500 index is up more than 9% since the election and economists have been revising their forecasts of GDP growth higher in anticipation of policy changes Trump is expected to make.Companies are also considering the impact President Trump and his policies will have on their operations. Early indications are they believe the impact will be significant and largely positive. This is based on an analysis of comments company CEOs ...
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In a recent blog post, one of our readers commented that they found the RVI to be a useful indicator. That comment illustrates what we try to accomplish with our blogs. We strive to introduce our readers to new ideas that they can use to improve their results. By explaining RVI we saw an opportunity to advance our goal.This is an indicator most traders haven’t heard of. The Relative Vigor Index, or RVI, was developed by John Ehlers and was first published in the January 2002 of Technical Analysis of Stocks and Commodities magazine. Ehlers has been a frequent contributor ...
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Value investors are familiar with a problem most experienced investors have faced. Identifying value stocks to buy is relatively easy to do but the problem is that stocks can remain undervalued for extended periods of time, years in some cases. That means they buy an undervalued stock and then wait for it to move higher. Sometimes, they wait for months or even years before other investors discover their undervalued gem.There are a number of ways to deal with this problem but one of the simplest could be to combine value investing with relative strength analysis. This is the approach taken ...
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One of the dangers of trading that many traders fail to consider is the problem of dead money. They may spend a great deal of trying to find buy candidates and working to limit the risk of loss. But they may completely forget about the risk of a market that doesn’t move. This can lead to disappointing results and if too many trades are in stocks that don’t move, a trader may never reach their ultimate financial goals.For traders, money is among their most important resources. Money, or trading capital, is the inventory for their business. Retailers who lack inventory ...
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Hundreds of indicators are available to help traders analyze price action. Moving averages, stochastics, MACD, RSI and other less well-known indicators help identify the trend or warn of a possible trend reversal. While the details of how to calculate each indicator varies, they are all using closing prices as their primary input. A moving average sums the closing prices while the stochastics formula places the closing price within context of the recent price action by including the recent high and low prices in its calculation. All of these indicators have been developed to find a tradable edge that can produce ...
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