Another question I get asked quite frequently is "with so many stocks out there, how do you know which ones will move"? Well of course we don't know for sure but we can narrow the list based upon several past occurrences. For example, many stocks move up into earnings. Now if they do move up considerably, then a good earnings is all ready built in and there is more down side risk if the company misses, so I would then recommend exiting a position, but ready to jump back in if the stock continues on good earnings or simply pulls back before its next ascent. Take Cert for example, it moved well into earnings, finance.yahoo.com. Even though earnings were actually above estimates the stock pulled back. I will be watching for a re-entry here.
There is also end of quiet period, (this is how I played SPWX, WMUX and GGNT this week). This is the time that investment banks begin coverage of recent IPOs.
Then we have the end of lock up, where stocks which were made available to insiders can sell their shares, this generally puts down side pressure on stocks, example, short SONS which traded down 100 pts from a high of 280 recently. I also look at hundreds of stocks a day, all within a portfolio against their peers. RSAS for example in the encryption space: finance.yahoo.com
appears to be lagging its peers. ENTU too but this is still under pressure from a poor earnings report.
I also often jump on movers like FCEL recently and simply raise stops along the way up.
If a stock isn't performing, I want to know why, SAPE and RMBS for example. Is it losing mkt share, revenue stream cut, is their a new technology or patent rights infringements, or royalties being jeopardized. Perhaps the company is simply in an oversold position and is ready for a reverse trend.
Next topic I will discuss is what time during the day tends to create the best entry points, moving averages, and when does a stock spin or get toppy, is it ready to short, also trading ranges and candle sticks, break out points and support levels.
Here are a few stocks I will be watching tomorrow for potential long positions:
SDLI,
IFCI,
CERT,
RSAS,
DIGL,
FCEL,
LBRT and
CMTN
Hope this takes some of the mystery out of trading,
See you soon,,,
Sharck |
