Another:
To add to Steve's answer-
Following the fundamentals can help if you know which ones in the group the analysts are hyping as a great value, such as EVI being hyped and knowing it follows SLB & HAL, but also study the groups to figure which ones to trade, such as CDG is in the same group, but can trade in big gaps so if you're wrong you're gonna regret it big. Also study the groups to know which ones will move in sympathy such as Steve's example with MUEI, money doesn't seem to jump into that one. Food for thought, study daily charts of your group members or overlay them, it might provide some insight. I'm going to put some time into that soon. It also helps to know specifics of the stocks, such as RD may not move in the same way the other oils may because of foreign currency issues. That would fall into the fundamentals category? I don't know many of these tidbits, but I think we all could help each other here with info like that, or knowing the fact that AHP owns 35% of IMNX has made me money, what have you found?
Sector index movement is a good quick indicator, except when a special situation is going on with a component such as a takeover. You get to know how up is up such as 10 points on the BIX is normal on a good day for the banks, but 10 points on the OSX would be big. Then look at your stocks.
The traders at my firm trade all of the groups together not just one group, such as technology, it also helps to know the subgroups like Steve said the boxmakers, disk drives. It even helps to know the subsub groups, but you can get overloaded I guess.
Regarding charting for tapereading trading-
I am a big follower of TA and the majority of my trading is based on it, but this type of trading, which I also do, doesn't seem to follow the support/resistance levels. Consider this- Hedgefund manager X has to be in the banks to play the game, is he going to stop and say hey, this is coming up to it's 50 day moving average? My opinion is no, because I have seen it time and again and sat on the sidelines passing up great trades. We are talking about popular, known liquid stocks. I use TA as a basis for the lesser ones. This is not to say it doesn't work for the big caps. (GM always fools me on the chart)
The Market-
Like Steve said, wait it out, your odds are better with the Market going your way. Do stocks move against the market? Yes. Though it's probably better to take a stock that held against a tanking market when the market reverses, or short one that couldn't keep up in a good market then the market tanks.
I know I'm rambling, but I am enthused about this discussion and hope others build on it. Take all my opinions for what they're worth- I've been at this for 2 yrs. though I work with some of the best and try to observe everything. If anybody disagrees with me, please post, I'd like to hear it.
-Alex |
