Stockscores.com Perspectives
For the week ending September 8, 2000
In this week’s issue:
- Commentary: Are Stocks More Successful than Companies?
- Feature Strategy: Finding the Top of a Hot Stock’s Ascension
- Tip of the Week: Stockscores.com Feature of the Day
- How to subscribe to the Stockscores.com Perspectives Daily Edition
***Stockscores.com Commentary***
“Psssst, hey buddy, want to make a few million dollars? Start a public
company.”
This past week, my wife and I walked through the marina outside the
billion-dollar Atlantis hotel in the Bahamas while we enjoyed a little holiday.
I was amazed at how many brand new super yachts were parked there. I’m not
talking about casual pleasure craft that you might take fishing with friends,
but rather, 80 to 180 foot floating palaces complete with helicopter landing
pads and 10 person crews. The spectacle quickly reminded me that the stock
market has been booming for a few years now.
A couple of days later, I was reading a magazine article that talked about the
massive number of dollars that was spent marketing dot com companies this past
year, and the relative lack of success that these marketing programs had.
Through the stock market, upstart technology companies had raised billions of
dollars to chase their individual dreams. Companies who believed they had a
good idea spent millions on advertising as they tried to attract customers and
their money. Today, the reality is that many of these businesses are faltering,
despite the astronomical stock valuations that the companies once enjoyed. The
article quickly reminded me that promotion moves the stock market.
Most new businesses fail. In a euphoric market, questionable businesses receive
financings that provide the capital necessary to promote the company and its
stock. Their advertising may do more to move stock price than it does to bring
customers. I sometimes think that more people bought Amazon.com’s stock than
ever bought a book from them. So far, the stock has been a greater success than
the business.
And who wins? The investor who is smart enough to realize that the global
financial machine generates capital for those who sell the dream. Those who buy
it and hold it are left holding the bag.
As the summer draws to a close, the financial promotion machine is getting
ready to starts its engine for another year. What will this year’s hot stories
be? In the past we have seen everything from immense gold deposits in the
Indonesian rain forest to web sites that solve our medical concerns. This year,
I can almost guarantee that new dreams will be told, and stocks will climb with
euphoric fervor yet again.
To be a smart and successful investor, you need to know that the promotion
season starts in October and runs until April or May. Most of the stories you
will hear during this time period will not have a happy ending. The best
promoted stocks will make dramatic moves that can make you a lot of money if
you remember to sell them before reality sets in. To succeed, you have to sell
them to someone who believes in the dream. Now that the summer is over, it is
time to get back to stock speculating. Just remember to save the dreaming for
when you are cruising the Caribbean on your yacht.
Enough Said.
***Stockscores.com Feature Strategy ***
When do you sell? An important question for the stock speculator, for you have
made nothing until you sell your stock. I have encountered many investors who
have ridden a stock to more than double what they paid for it, but never cash
in and remain owners as the stock dips below their purchase price.
Stocks that make strong moves higher often appreciate more than their
fundamentals justify. Eventually the market realizes its mistake and the stock
corrects lower, often dramatically. This activity presents an opportunity for
an owner of the stock to cash in, as well as for the short seller who can
profit from a quick and sharp move lower.
This week, we look at a Stockscores.com Market Scan that can pinpoint stocks
that have made excellent short-term gains, but which are likely to correct in
the short term. This strategy should teach stock speculators how to realize
their strong performing stock may be topping out, as well as provide a short
term trading strategy for the investor looking to make a short-sell trade.
Our Market Scan should reveal stocks that have this potential, and a quick
visual inspection of the charts will help to further reveal the kind of
situations that fit the requirements of this strategy.
Using the Stockscores.com Market Scan tool, input the following Market Scan
filter criteria by setting:
Candle = Bearish
Gain/Loss >= 25 % over the last 30 days
Today Relative to 150 Day Volume Average = Above
$ Value Volume >= 2500000
To limit the number of stocks revealed by this scan, I also set the Exchange =
NASDAQ. My scan revealed 30 stocks, whose charts I inspected using the Chart
Viewer feature. Many of them had already come back off of their highs, but I
want to find the charts that show a stock making a new high today but closing
below its open. The colored candlestick charts show stocks closing below their
open with a red colored bar. In these situations, the wider the trading range
and the stronger the volume, the more likely the stock is topping out.
The following stocks are good examples of what we are looking for:
Komag Incorporated (KMAG)
Scios Inc. (SCIO)
Stocks that close below their low after hitting the high in a bullish run are
often telegraphing future profit taking. If your stock is moving up quickly,
watch for this signal.
***Stockscores.com Site Tip of the Week***
Looking for a stock to consider as an investment? Each day, the Stockscores.com
site highlights a feature stock that meets the requirements of one of our
strategies. Generally, these stocks are larger companies that have good
potential to make a move. The picks are completely unbiased, and are based
solely on the technical analysis that I apply. Best of all, the features of the
day are available completely for free just by visiting Stockscores.com.
***Stockscores.com Perspective Daily Edition***
Each day, we scan the market for opportunities and reveal only the best to our
Daily Edition subscribers by email. Plus, we provide comments on past features
with regular updates, helping you understand how to trade these features.
A two-week free trial is available for new subscribers. To enroll, simply send
a request to tyler@stockscores.com. We will have you added within a week of
your
request.
One-year subscriptions are available at the following rates:
$100US
$125CDN
Checks can be sent, made out to Perspectives, to:
Perspectives
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Calgary, AB T2S 1W4
***References***
To get the Stockscore on any of over 20,000 North American stocks:
stockscores.com
For a background on the theories used by Stockscores:
stockscores.com
For strategies that can help you find new opportunities:
stockscores.com
To scan the market using extensive filter criteria:
stockscores.com
To build a portfolio of stocks and view a slide show of their charts:
stockscores.com
To see which sectors are leading the market, and the stock components:
stockscores.com
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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. |
