I’ll admit that I haven’t read many of the great works of literature.  Even though I read a great deal, almost all of my reading is related to the stock market. (Hopefully, there will be time to read more literature when I retire.) But sometimes, the two intersect in unexpected ways, and I find myself benefitting from the works of great authors.  I frequently find myself thinking about quotes that others consider to be important and symbolic of the work. One quote many personal finance writers like to share is from Ernest Hemingway’s classic “The Sun Also Rises.”  “How did… Read More

I’ll admit that I haven’t read many of the great works of literature.  Even though I read a great deal, almost all of my reading is related to the stock market. (Hopefully, there will be time to read more literature when I retire.) But sometimes, the two intersect in unexpected ways, and I find myself benefitting from the works of great authors.  I frequently find myself thinking about quotes that others consider to be important and symbolic of the work. One quote many personal finance writers like to share is from Ernest Hemingway’s classic “The Sun Also Rises.”  “How did you go bankrupt?” Bill asked.  “Two ways,” Mike said. “Gradually and then suddenly.”  #-ad_banner-#Now, I am certain there is a great deal of context I’m missing, and that’s a side effect of not reading the book. However, even without context, this quote is striking because it describes a process that applies to almost everything.  When we boil water on the stove, the temperature appears to change “gradually and then suddenly.” When a child is getting sick, their behavior seems to change “gradually and then suddenly.” When someone struggles at work, their performance often seems to change “gradually and then suddenly.” … Read More

If you watch CNBC, you’ve probably heard an analyst say something along the lines of…  “The time to buy is when there’s blood in the streets.”  Essentially, this means that bad news can be a buying opportunity.  #-ad_banner-#At times, that philosophy is correct. But it’s often better to wait for the impact of the bad news to become clear before buying. That approach explains why I recently told my Profit Amplifier readers that my indicator tools have a “buy” signal on mining giant Vale S. A. (NYSE: VALE).  VALE fell on catastrophic news in January when a dam maintained by… Read More

If you watch CNBC, you’ve probably heard an analyst say something along the lines of…  “The time to buy is when there’s blood in the streets.”  Essentially, this means that bad news can be a buying opportunity.  #-ad_banner-#At times, that philosophy is correct. But it’s often better to wait for the impact of the bad news to become clear before buying. That approach explains why I recently told my Profit Amplifier readers that my indicator tools have a “buy” signal on mining giant Vale S. A. (NYSE: VALE).  VALE fell on catastrophic news in January when a dam maintained by the company in Brazil collapsed and killed an estimated 300 people. Dams are commonly used by miners to contain waste products, and Vale has more than 130 dams in Brazil. The company is now working to replace older dams with safer technology.  The collapse was absolutely a tragedy, and I do not want to minimize that fact. Vale will work with authorities and victims to resolve claims and address other concerns, as it should. However, my goal in Profit Amplifier is to recommend the best available trades with the highest potential, and VALE’s stock is giving a “buy” signal.  The… Read More

I want to take a moment to highlight what’s going on in the broader market.  Right now, the market is at an important turning point that could determine the direction of the next big market trend.  Just check out the chart of the S&P 500 below, which also shows important support level at 2,800 (marked in blue).  Now, I know many investors ignore technical analysis, but there are many investors who follow important technical signals. And when enough large investors react the same way to the same technical signals, those signals become important.  #-ad_banner-#One technical factor that tends to be… Read More

I want to take a moment to highlight what’s going on in the broader market.  Right now, the market is at an important turning point that could determine the direction of the next big market trend.  Just check out the chart of the S&P 500 below, which also shows important support level at 2,800 (marked in blue).  Now, I know many investors ignore technical analysis, but there are many investors who follow important technical signals. And when enough large investors react the same way to the same technical signals, those signals become important.  #-ad_banner-#One technical factor that tends to be important to traders is the law of round numbers, which gets mentioned in a number of books written in the first half of the 20th century. One of the books that mentions round numbers is “Reminiscences of a Stock Operator,” the 1923 classic that sits on the desk of many Wall Street traders.  In the book, traders are advised to watch round numbers, and when a decisive break occurs, the trend is usually well established. In the chart, 2,800 is a round number and the blue line shows that prices stopped advancing at that level three times at the end… Read More

There’s always a fascination with low-priced small-cap stocks. Maybe it’s the “venture capital-like” approach that it brings, or maybe it’s the dream of getting in on the ground floor of the next Facebook (Nasdaq: FB) or Amazon (Nasdaq: AMZN). Whatever the case might be, there’s no denying that small-cap stocks can provide investors with astronomical returns. You’re more likely to see a small-cap stock with strong growth prospects return triple digits in a year than you are a blue-chip stock. —Recommended Link— Wall Street won’t tell you about this… but we just uncovered a bombshell… From custom coded cures… Read More

There’s always a fascination with low-priced small-cap stocks. Maybe it’s the “venture capital-like” approach that it brings, or maybe it’s the dream of getting in on the ground floor of the next Facebook (Nasdaq: FB) or Amazon (Nasdaq: AMZN). Whatever the case might be, there’s no denying that small-cap stocks can provide investors with astronomical returns. You’re more likely to see a small-cap stock with strong growth prospects return triple digits in a year than you are a blue-chip stock. —Recommended Link— Wall Street won’t tell you about this… but we just uncovered a bombshell… From custom coded cures to blood cell-sized “nanobots” one company is paving the way towards ending disease as we know it… We’ve got the company and the ticker that could make you millions. ​Click here for the full details. That’s why I decided it would be fun to fire up my Maximum Profit system and scan the market for small-cap stocks (market cap under $2 billion) with share prices under $10. I also wanted to make sure we weren’t getting thinly-traded stocks, or those with low volume, so I made sure that at least 75,000 shares change hands on average daily. Using a… Read More

There are two big stories to watch in the stock market right now. One involves the Federal Reserve… …and the other involves Lyft, Uber, Pinterest, and other tech companies expected to complete initial public offerings (IPOs) in the near future. First, let’s look at the Fed, which recently announced some changes in their outlook. Story #1: The Fed Just three months ago, their forecast indicated we should expect two more interest rate hikes before the end of 2019. Last week, that changed, and the forecast now is for no additional rate hikes this year. Read More

There are two big stories to watch in the stock market right now. One involves the Federal Reserve… …and the other involves Lyft, Uber, Pinterest, and other tech companies expected to complete initial public offerings (IPOs) in the near future. First, let’s look at the Fed, which recently announced some changes in their outlook. Story #1: The Fed Just three months ago, their forecast indicated we should expect two more interest rate hikes before the end of 2019. Last week, that changed, and the forecast now is for no additional rate hikes this year. That indicates the Fed believes the economy will slow, and their forecasts for economic growth confirmed that. GDP is now expected to grow 2.1% this year, a cut of 0.2% from the December forecast. The Fed also announced changes to its plans for drawing down its balance sheet. During the financial crisis, the Fed’s balance sheet increased from less than $1 trillion to more than $4 trillion. In the past year, they have been selling off assets to bring the balance sheet down to a normal level. They had been selling $50 billion worth of securities a month. Read More

Many traders ignore seasonal patterns, simply because they’re based on the calendar.  But I’m here to tell you that seasonal trends are important, and there’s a particular one that I want to highlight this week.  To find a seasonal trend, an analyst calculates how prices performed on a certain day in the past. For example, we know that since 1950, March has been an “up” month for the S&P 500 64% of the time. Since there’s normally about a 59% chance of an “up” month, that’s a slight seasonal bias to the “up” side.  However, that’s not really a tradable… Read More

Many traders ignore seasonal patterns, simply because they’re based on the calendar.  But I’m here to tell you that seasonal trends are important, and there’s a particular one that I want to highlight this week.  To find a seasonal trend, an analyst calculates how prices performed on a certain day in the past. For example, we know that since 1950, March has been an “up” month for the S&P 500 64% of the time. Since there’s normally about a 59% chance of an “up” month, that’s a slight seasonal bias to the “up” side.  However, that’s not really a tradable seasonal pattern because it doesn’t offer a very strong signal. An example of a strong signal would be one that tells us there is a 75% chance for a market gain in the next week, or if the probability of a gain in the next week is significantly below average.  …which is exactly what the charts are showing us right now.  For the next two weeks, seasonals are weak and that tells us to expect a pullback in the broad stock market.  There are several ways to look at seasonals. Two of the more popular techniques are shown below in… Read More

The ongoing situation with Boeing (NYSE: BA) is important for investors to watch.  As you probably know, on Sunday, March 10, a Boeing 737 MAX 8 aircraft crashed just six minutes after takeoff in Ethiopia, killing all 157 passengers and crew aboard.  Authorities have begun investigating the cause of the crash, which was the second crash involving that particular model within the span of several months. In the meantime, a number of countries issued orders to ground the Boeing model, with the U.S. following suit on Wednesday.  Safety concerns about the airplane maker’s 737 MAX aircraft are a tragedy, and… Read More

The ongoing situation with Boeing (NYSE: BA) is important for investors to watch.  As you probably know, on Sunday, March 10, a Boeing 737 MAX 8 aircraft crashed just six minutes after takeoff in Ethiopia, killing all 157 passengers and crew aboard.  Authorities have begun investigating the cause of the crash, which was the second crash involving that particular model within the span of several months. In the meantime, a number of countries issued orders to ground the Boeing model, with the U.S. following suit on Wednesday.  Safety concerns about the airplane maker’s 737 MAX aircraft are a tragedy, and I don’t have any intention of minimizing them. And we don’t have a clear idea of just how much this will affect Boeing just yet. But from an investment perspective, history shows that problems in a single company can spark a significant decline in an overvalued market. Let me explain… #-ad_banner-#Historic examples include the October 1989 market crash that followed the collapse of a leveraged buyout deal for United Airlines. That crash was small, with the S&P 500 falling a little more than 6% that day, but the deal’s collapse showed traders that buyouts were risky. The news pushed prices down… Read More

Valuations matter in the long run. That’s important to remember. Especially at times like this when almost every valuation metric indicates the stock market is expensive.  There are many definitions of these terms, but, to me, valuation metrics are tools to normalize the relationship between stock prices and fundamentals. Popular metrics include the price-to-earnings (P/E) ratio and price-to-sales (P/S) ratio. There are dozens of these indicators, and each has its advantages and disadvantages.  —Recommended Link— Create a 10%+ Income Stream for Life We’re sitting on a collection of the safest, most generous monthly payers available. And while $11,200 in… Read More

Valuations matter in the long run. That’s important to remember. Especially at times like this when almost every valuation metric indicates the stock market is expensive.  There are many definitions of these terms, but, to me, valuation metrics are tools to normalize the relationship between stock prices and fundamentals. Popular metrics include the price-to-earnings (P/E) ratio and price-to-sales (P/S) ratio. There are dozens of these indicators, and each has its advantages and disadvantages.  —Recommended Link— Create a 10%+ Income Stream for Life We’re sitting on a collection of the safest, most generous monthly payers available. And while $11,200 in dividend checks is a welcome addition to anyone’s income, investors also love racking up capital gains as high as 446%. Start generating a 10%+ income stream for life today from these consistent companies. Normalizing is a way to make numbers comparable. For example, if we are talking about company earnings, we might find one company has $10 million in earnings and another has $100 million in earnings. By itself, this information really doesn’t tell investors anything about how the stock is valued.  To make earnings more comparable, companies often report earnings per share (EPS). Assuming the first company has 10… Read More

In older books about the stock market, there’s a pattern called a “coil.” Precise definitions differ, but the general idea is that the price action is acting like a spring being compressed. Eventually, the spring is released, and it makes a rapid move as it reverts to its full size.  In the market, the coil is a setup for a sharp price move. The chart below shows the recent price action with a volatility indicator at the bottom of the chart.  The indicator is the Income Trader Volatility (ITV) indicator I developed to help me identify the best times to… Read More

In older books about the stock market, there’s a pattern called a “coil.” Precise definitions differ, but the general idea is that the price action is acting like a spring being compressed. Eventually, the spring is released, and it makes a rapid move as it reverts to its full size.  In the market, the coil is a setup for a sharp price move. The chart below shows the recent price action with a volatility indicator at the bottom of the chart.  The indicator is the Income Trader Volatility (ITV) indicator I developed to help me identify the best times to trade options. It’s a pure measure of volatility that responds relatively quickly to the market action. Best of all, it solves the problem of the lag that is found in many popular volatility indicators.  —Recommended Link— 9 Game Changing Predictions for 2019 Want to know where the money will be in 2019? Discover over a dozen potentially life-changing recommendations inside our special new report, 9 Game-Changing Investment Predictions for 2019. Click here for the full details now. Currently, volatility is low, as it was in September. ​​ ITV tends to move from low to high values. Current readings are… Read More

Earnings season is winding down, and based on the data we’re seeing so far, investors have cause for concern. What is that, you ask? Because, as I told Income Trader readers earlier this week, I believe the data points to a change in the trend of fundamentals. Specifically, the data I find interesting is the relationship of actual reports to expectations.  Let me explain… —Recommended Link— The Stock Market Hack That Actually Works *(Effective on the NYSE, NASDAQ, CBOE, CHX, NYSE Arca, & TSX Stock Exchanges). “It pulled me out of the hole with a recovery of $30,000 in… Read More

Earnings season is winding down, and based on the data we’re seeing so far, investors have cause for concern. What is that, you ask? Because, as I told Income Trader readers earlier this week, I believe the data points to a change in the trend of fundamentals. Specifically, the data I find interesting is the relationship of actual reports to expectations.  Let me explain… —Recommended Link— The Stock Market Hack That Actually Works *(Effective on the NYSE, NASDAQ, CBOE, CHX, NYSE Arca, & TSX Stock Exchanges). “It pulled me out of the hole with a recovery of $30,000 in just a couple of months.” ​Read more here… Expectations Vs. Reality Over the past five years, on average, 71% of the companies in the S&P 500 beat analysts’ expectations for earnings per share (EPS). About 9% meet expectations, and about 20% miss expectations.  According to FactSet, 89% of the companies in the S&P 500 had reported earnings through last Friday (Feb. 22). There are a few interesting numbers to consider when looking at the group:  — 69% beat EPS estimates. This is below the one-year (77%) and five-year average (71%).  — EPS reports are 3.5% above expectations,… Read More