I will do the best I can answering these. You may have to rephrase them if I get off track. :-)
The easiest way for me to explain the comparison chart is for me to have you look at an example. Go to the Microsoft investor site. Enter LVLT. Change the chart menu to investment growth. (http://investor.msn.com/charts/charting.asp?Symbol=lvlt)
In the upper right hand corner there is a compare with box. Enter CNCX, click add. Enter CNXT, click add. It will show you a comparison of the 3 stocks based on an initial 10,000 investment in each. Using this one can see that early on CNCX had an enormous performance lead. Then one could have pulled out and moved into CNXT for the next best performance. This is the kind of comparison I like to look at. Keep in mind a daily or even weekly look at this kind of comparison is enough to help you allocate your capital amongst several different stocks that you think have good prospects.
"TA only?" Primarily. I do like to know what the company does. Who composes it's major client base. I like to do a quick news scan and check the insider trading. Earnings growth is a minor consideration. Price action is paramount.
Sector rotation, I don't think about. I only need to have good price movement. If the sector I am investing in were to lose all price movement then I would look around to see what was moving.
I like to work with stocks that everyone can work with. I want them to have enough float and a high enough price that Funds and other large investors will get in on the action. I don't want my action limited to MMs, small investors, and pure speculators. You can't get large sustained moments on these alone, the whole market has to get in on the action for a big drive to develop.
I don't really know how tightly wound a stock is. I don't know whether it will come back, perform well, or any such thing about the stock. By watching the price action I get a feel that it is turning or has turned and it becomes a candidate. Once I put a trade on in the stock I watch to make sure a profit develops. If not I bail. If a profit trend develops then I watch the comparison with my other choices to determine where the real energy is. I scale back the slower ones (or get out altogether) and focus on the faster ones.
How do I develop my list of potentials? Primarily through reading of current affairs. I try to think about what is going to happen in the next year or two that will become a big demand thing in the mind of the general public. The early stocks that became hugely overpriced compared to their earnings power will lose cachet. At some point a P/E of six million becomes unattractive after it has been around for a year or two. But the industry of the Internet and the exploitation of its power will provide many future opportunities for more manias and more outlandish P/Es in new stocks. I think infrastructure, support, bandwidth development and raids, the big media grab that must sooner or later develop, business to business companies, and retail battles will provide many opportunities in the next year or two.
Finding stocks that are trending strongly in the direction of the over all market doesn't require real genius, they're everywhere. All one has to do is sort out the ones with the most strength. Check the charts for a good entry point and go to work. Of course the really hard work seems to be sitting back and letting the market do it's job.
KK |
