If you want to start an argument, find adherents of technical analysis and adherents of fundamental analysis and ask them which investing approach is better. The technical analysts will tell you a close read of a company’s financial statements won’t help you know whether a stock represents a timely investment. The fundamental analysts will counter that looking at charts only tells you where a stock has been, not where it is going. With all due respect, they are both wrong. The real secret to successful investing is the marriage of both approaches. In fact, I’ve singled out a… Read More

If you want to start an argument, find adherents of technical analysis and adherents of fundamental analysis and ask them which investing approach is better. The technical analysts will tell you a close read of a company’s financial statements won’t help you know whether a stock represents a timely investment. The fundamental analysts will counter that looking at charts only tells you where a stock has been, not where it is going. With all due respect, they are both wrong. The real secret to successful investing is the marriage of both approaches. In fact, I’ve singled out a pair of factors — one from each camp — that can be used in tandem to deliver robust gains. It’s an approach that has led me to bag triple-digit gains, often in a matter of months, from stocks across all industries. #-ad_banner-# I want to walk you through this two-pronged approach so you can profit from my strategy in your daily trading activities. It’s All Relative  The term relative strength is simple and transparent. It’s a measure of how a stock or sector is trading relative to the broader market. When the market is flat or rising, any… Read More

As the market continues to carve out what looks to be a bottom, I’d like to show you the power of my trend-following system, because it’s during times like these that the next stock market leaders build their launch pads for huge uptrends.  The Alpha Trader system is based on an indicator known as the Alpha Score. When pressure comes off the market, stocks showing high Alpha Scores are likely to be the first to take off. And we want to be ready to act immediately when the system signals a buy. What makes the Alpha Score so special? Simply… Read More

As the market continues to carve out what looks to be a bottom, I’d like to show you the power of my trend-following system, because it’s during times like these that the next stock market leaders build their launch pads for huge uptrends.  The Alpha Trader system is based on an indicator known as the Alpha Score. When pressure comes off the market, stocks showing high Alpha Scores are likely to be the first to take off. And we want to be ready to act immediately when the system signals a buy. What makes the Alpha Score so special? Simply put, it pinpoints winning stocks.  The Alpha Score is a proprietary measure of fundamental and technical strength. I use it to rank all U.S. stocks based on two key drivers of big price trends. These two factors have shown up time and again at the beginning of huge price moves.  Today, I want to show you the Alpha Trader system in action with a position we closed earlier this year in Southwest Airlines (NYSE: LUV) for a 54% gain. LUV is far from our biggest winner. The Alpha Score has given buy signals for stocks that went on to gain… Read More

With the stock market’s rebound from its September lows fueled by some of its previously worst performers, it does not make sense to chase any sector to the downside. However, identifying badly beaten stocks that are about to crack could set you up for fast profits in the near future. Health care, the former market leader, has fallen on hard times since the summer. Unlike the broader market, it set a lower low in September. It then lagged as most sectors rallied in early October following a weaker-than-expected September jobs report that suggested the Federal Reserve would not raise interest… Read More

With the stock market’s rebound from its September lows fueled by some of its previously worst performers, it does not make sense to chase any sector to the downside. However, identifying badly beaten stocks that are about to crack could set you up for fast profits in the near future. Health care, the former market leader, has fallen on hard times since the summer. Unlike the broader market, it set a lower low in September. It then lagged as most sectors rallied in early October following a weaker-than-expected September jobs report that suggested the Federal Reserve would not raise interest rates this year. Within that sector, diagnostic, imaging and surgical supplies maker Hologic (Nasdaq: HOLX) is a prime example of a stock about to crack. When it does, shares could quickly plunge more than 15%. At first glance, the short-term chart seems disjointed, although support at roughly $37 is visible. Momentum indicators are unremarkable, but relative performance versus the broader market is weak, as would be expected in a stock that is still trading near its summertime lows. In contrast, the S&P 500 is about 7% above its lows. It is the long-term chart below that tells the… Read More

Last month, airline stocks seemed to be on the verge of reversing their bearish 2015 trends. In fact, up until then, the entire transportation sector was still trapped in a disastrous decline, so airline strength offered the first ray of hope for the group all year. United Continental Holdings (NYSE: UAL) was a prime example of the attempted bullish reversal as it broke through the declining trendline from its January peak. The day of the breakout, the stock moved up more than 6% on heavy volume in a classic technical move. But just one week later,… Read More

Last month, airline stocks seemed to be on the verge of reversing their bearish 2015 trends. In fact, up until then, the entire transportation sector was still trapped in a disastrous decline, so airline strength offered the first ray of hope for the group all year. United Continental Holdings (NYSE: UAL) was a prime example of the attempted bullish reversal as it broke through the declining trendline from its January peak. The day of the breakout, the stock moved up more than 6% on heavy volume in a classic technical move. But just one week later, UAL was trading back below that trendline in an equally classic technical failure. The bulls seemed to flame out as demand withered. Shares began to fall under their own weight as whatever buyers there were could not absorb the supply offered for sale.   But this was more than a failure to hold a trendline breakout. It was also a failure to hold a breakout through the top of the May-to-September trading range, which is now likely to break to the downside. #-ad_banner-# In technical analysis, the more features that are broken to the upside on a breakout, the stronger… Read More

The sharp correction in stocks over the past few months has investors searching for value. But as investors cope with various global economic risks and stagnant earnings growth, upside opportunities will likely be limited. So, with the major indices below their 200-day moving averages, a key bearish indicator, I’m searching for stocks that are bucking the technical trend. These stocks are the ones most likely to deliver bullish profits — sometimes in a very short amount of time, given the high volatility in the market right now. For instance, my Profit Amplifier readers recently closed a trade… Read More

The sharp correction in stocks over the past few months has investors searching for value. But as investors cope with various global economic risks and stagnant earnings growth, upside opportunities will likely be limited. So, with the major indices below their 200-day moving averages, a key bearish indicator, I’m searching for stocks that are bucking the technical trend. These stocks are the ones most likely to deliver bullish profits — sometimes in a very short amount of time, given the high volatility in the market right now. For instance, my Profit Amplifier readers recently closed a trade in international footwear and apparel giant Foot Locker (NYSE: FL) for a 27% return in just four days. That’s right; we opened the trade on a Tuesday and closed it on a Friday. That works out to a stunning 2,481% annualized gain. There were two keys to our success with this trade that I’d like to share so you can potentially replicate them in your portfolio. First, as I mentioned, Foot Locker was seriously bucking the bearish trend of the broader market. At the time of my trade recommendation, the stock was up nearly 30% year to date while the… Read More

Today I want to tell you about an investing strategy that defies logic. It shouldn’t work based on everything we’ve learned about the stock market. Yet it does. In fact, for more than half a century, investors and traders have used this strategy to produce unparalleled results. And no, for those of you who may be wondering, this strategy doesn’t involve options, derivatives or any other obscure financial product. What’s more, what I’m about to show you can be used as part of any general investing strategy — regardless of whether you’re focusing on income, growth, blue chips, small caps… Read More

Today I want to tell you about an investing strategy that defies logic. It shouldn’t work based on everything we’ve learned about the stock market. Yet it does. In fact, for more than half a century, investors and traders have used this strategy to produce unparalleled results. And no, for those of you who may be wondering, this strategy doesn’t involve options, derivatives or any other obscure financial product. What’s more, what I’m about to show you can be used as part of any general investing strategy — regardless of whether you’re focusing on income, growth, blue chips, small caps or even commodities. Specifically, I’m talking about relative-strength investing. Relative strength investing is simply a type of momentum investing. It involves buying the best-performing stocks (relative to the market) and holding them until their momentum changes course. To most investors, especially those considered value investors, this strategy probably sounds ridiculous. After all, most people have heard the phrase “buy low, sell high.” Since relative strength investors buy stocks that are already outperforming today, many view this style of investing as counterintuitive. But that’s a mistake… and it’s one many people make whenever they approach a stock pick. That’s because most… Read More

It seems like nostalgia looking at Nokia (NYSE: NOK) with a favorable outlook. The company is currently known to domestic investors as an also-ran cell phone maker — I am one of the rare few who own a Nokia smartphone and happen to like it very much — even though it operates in network infrastructure and navigation software as well.  But there is more to the story than a false perception by the investing public.  The company has cleared most of its hurdles in its quest to buy rival Alcatel-Lucent (NYSE: ALU), and according to some analysts, that would create… Read More

It seems like nostalgia looking at Nokia (NYSE: NOK) with a favorable outlook. The company is currently known to domestic investors as an also-ran cell phone maker — I am one of the rare few who own a Nokia smartphone and happen to like it very much — even though it operates in network infrastructure and navigation software as well.  But there is more to the story than a false perception by the investing public.  The company has cleared most of its hurdles in its quest to buy rival Alcatel-Lucent (NYSE: ALU), and according to some analysts, that would create quite a competitive company overseas. From a technical perspective, NOK appears to be setting up for an upside move. While the long-term picture is still damaged, there is something intriguing in the short term that could provide a quick profit for traders.  Specifically, the stock has carved out a bullish flag pattern just below a short-term trendline. Said another way, NOK seems to be resting before making its breakout attempt. Any fears and problems brought to light by the merger announcement have had several months to work themselves out, and that shows up on the chart.  #-ad_banner-#… Read More

Note: Stay tuned at the end of this article for a bonus trade that could turn a 19% drop in today’s stock into 133% gains before year end.  It is provided courtesy of options expert Jared Levy who has recommended trades that delivered annualized gains of 220%, 508%,… Read More

Last month was the worst August for the venerable Dow Jones Industrial Average in more than 16 years. For the S&P 500, it was the worst August since 2001.The volatility since has been almost sickening, but I believe the most intense portion of the selling is behind us. The AIM sentiment indicator, which I discussed last week, has plunged even further into bearish territory. In fact, it’s dropped so far it’s more bearish now than it was during the 2008 financial crash.  As I explained then, market sentiment is a classic contrarian indicator that can help spot changes… Read More

Last month was the worst August for the venerable Dow Jones Industrial Average in more than 16 years. For the S&P 500, it was the worst August since 2001.The volatility since has been almost sickening, but I believe the most intense portion of the selling is behind us. The AIM sentiment indicator, which I discussed last week, has plunged even further into bearish territory. In fact, it’s dropped so far it’s more bearish now than it was during the 2008 financial crash.  As I explained then, market sentiment is a classic contrarian indicator that can help spot changes in financial trends. When too many people are thinking one way, the market is primed to move in the opposite direction. From a sentiment perspective, this market downturn is a giant vise squeezing out all the bears. #-ad_banner-# When it’s over, I expect the ensuing bottom to provide solid profit opportunities in stocks with high Alpha Scores (more on this later). And from what I’m seeing, those outperforming stocks are likely to be based in the United States. Relative to the rest of the world, U.S. stocks are doing the “least poorly.” You can see this clearly in the Relative… Read More

Arguably the hottest media stock of the past year, Netflix (Nasdaq: NFLX), has been in serious decline for the past five weeks. And by serious I mean it has shed nearly a quarter of its market capitalization since peaking in early August.  This has bargain hunters chomping at the bit. But a look at the chart tells us at its current “sale” price it is not cheap and could drop another 20% from here in a hurry.  In short, this is a stock for short-term bears that may present a good buying opportunity for long-term bulls… Read More

Arguably the hottest media stock of the past year, Netflix (Nasdaq: NFLX), has been in serious decline for the past five weeks. And by serious I mean it has shed nearly a quarter of its market capitalization since peaking in early August.  This has bargain hunters chomping at the bit. But a look at the chart tells us at its current “sale” price it is not cheap and could drop another 20% from here in a hurry.  In short, this is a stock for short-term bears that may present a good buying opportunity for long-term bulls in a few weeks. Since this column focuses on trading, not long-term investing, let’s take a look at the reasons why Netflix has a fork stuck in it.  The rather obvious technical pattern on the chart is the ubiquitous head-and-shoulders with its central high (head) flanked by two lower highs (shoulders) on each side. The bottom of the pattern is bound by the neckline, which connects the troughs between the peaks. Whether it is drawn flat or with a slight downward slope from left to right is not important. #-ad_banner-# What is important… Read More