Stockscores.com Perspectives
For the week ending November 17, 2000
In this week's issue:
- Commentary: The Importance of Perception
- Feature Strategy: Buying the Beat Up Stocks
- Tip of the Week: Ticker Search
- How to subscribe to the Stockscores.com Perspectives Daily Edition
***Stockscores.com Commentary***
I spent most of today wandering around the Comdex technology trade show where
the technologies of today and tomorrow are on display. The show is immense in
scope, and anyone with an interest in technology must feel that he or she has
walked in to the world's largest toy store. Ted Kuzinski would not be
impressed, but I was.
As I sit down in the hotel room to write this piece, I can't help but feel
pretty positive about technology companies and the prospects that they bring
their owners. In particular, wireless companies like Omnisky and Metricom and
those with a presence in the handheld computer industry like Compaq,
Handspring, Palm and Microsoft. The excitement that you feel around the
displays of the technologies of tomorrow is real, and those who subscribe to
the Peter Lynch school of investing might be eager to rush out and buy their
stocks.
As a person who analyzes stocks by looking at their charts and not at
fundamentals, I can quickly lose my enthusiasm when I take a look at the charts
of many technology companies. The dismal performance of the Nasdaq over the
past six or seven months has left technology investors as happy as a child
whose ice cream has fallen off the cone.
Investors are left with a problematic paradox. The technologies are exciting,
their revenue potential significant, but the pessimism in the market is
overwhelming. I am reminded of two of my simple rules about the stock market:
- Good companies do not necessarily mean good stocks, and good stocks do not
necessarily mean good companies.
- For a stock to be successful, perception and psychology is everything.
There is no doubt in my mind that technology stocks will have their day again,
and I think that the next bull run in technology is not that far away. Comdex
is proof that businesses are doing exciting things and that investors have
stories to pay attention to.
However, the reality of today's market is that investors have no confidence in
technology companies and few buyers are eager to snap them up. These stocks are
like a losing football team with a lot of talented players. The fans won't line
up for tickets until the team starts to win.
The stock chart measures the mood of the market and its opinion about a
company. Watching the charts can tell you when the mood is right for a company
with exciting products, allowing you to participate in stocks when the time is
right. The Stockscores interprets this market activity, so judging a company's
chart is as simple as understanding the Stockscore. We have a new tool coming
soon that will make that even easier, so stay tuned. For now, remember that
stocks that have Stockscores above 80 have good potential and are worth
considering because the market psychology surrounding them is favorable.
Enough Said.
***Stockscores.com Feature Strategy ***
Many investors are looking for a deal on stocks, trying to find good companies
whose stocks have fallen out of favor but are now so cheap that they deserve
attention again.
The problem with bottom fishing is that it is often hard to find the bottom.
The reason most stocks go into downtrends is because they have something wrong
with their business. It takes time to reverse fundamentals and longer to
reverse market pessimism. Buying at a low price is frustrating when the stock
continues lower. This very simple strategy helps to find the stocks that have a
better potential of reversing and not seeing lower lows.
Like all strategies that utilize the Stockscores.com Market Scan tool, there
are two stages. First is the scan that utilizes the filters available in the
Market Scan tool. This helps to filter through the over 20,000 stocks that are
scored by Stockscores.com and build a short-list of candidates. The second
stage is to visually inspect the charts of the candidates to see if they meet
the chart pattern requirements of the strategy.
To find some bottom-fishing candidates, set the Market Scan tool as follows:
Stockscore >=80
Long Term Moving Average = Bearish
Medium Term Moving Average = Bearish
Short Term Moving Average = Bullish
$Volume >= 1000000 ($1,000,000, but you can vary this according to what you are
looking for. You may want to lower the limit for CDNX or OTC BB stocks, and
raise the limit for Nasdaq or NYSE stocks).
Stage two is the visual inspection. We want to look for a couple of things.
First, find stocks that are in or were recently in a consolidation, which is a
period of lower volatility when the stock forms a base and trends sideways.
Second, look for stocks that are showing signs of wanting to break through the
upper limit of the consolidation, or have very recently broken through.
Finally, eliminate those stocks that have already made rapid gains, as those
are opportunities missed. The Stockscore may still be strong, but the buy point
came earlier in the move upward.
I did this scan and found 9 stocks that met the requirements. Here are some
comments on them:
AOG has broken its downtrend and looks like it could reverse. Unfortunately,
the entry point was two days ago when the stock first broke from the
consolidation period. Still good, but riskier here.
IPIX looks decent, but I would like to see more signs of a breakout.
IT.SPS a Toronto sector index that looks very good. It would be a good idea to
look at the stocks that make up this sector.
KLT an excellent candidate, the only thing that would make it better would be
to have an increase in trading volume as a demonstration of market enthusiasm.
MNTR another very good looking candidate, this stock is worth considering.
OXY good looking chart, looks likely to reverse trend.
T.A very good, this is a prime example of the kind of chart we are looking for
with this scan.
TAR not bad, but we can do better. The sharp downtrend that occurred recently
is probably a little too fresh in the market's mind, which will hurt this
stock's short term performance.
UXU ignore, this is not a stock.
***Stockscores.com Site Tip of the Week***
Near the top of each page on Stockscores.com is a link to the Ticker Search
tool, allowing users to find the ticker symbol for any stock or index of
interest. The Toronto Stock Exchange has an excellent break down of market
sector indices, all of which are available on Stockscores.com. All of these
indices begin with the symbol IT. and are followed by the symbol for the index.
The best way to get a list of all these symbols is to utilize the Ticker Search
tool and do a search for Symbols starting with IT., making sure to include the
dot. Those interested in the Canadian market sector charts and their
Stockscores should give this a try.
***Stockscores.com Perspectives 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.
Subscriptions are $2500 per year. For more information, contact our
subscription sales,
Cindy Rowe at perspectives@stockscores.com
***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
***Change of Email Address or Removal from Email List
Please go to the Registration area of the site, and utilize the Edit tool.
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. |
