The penny stock I personally hold, AERS, was one of the top 5 best performing penny stocks on Wall Street last week!
Rumor has it that they are in talks with a Brazilian mobile phone company. More big news should be coming any week now.
AERS is up over 100% in just the last 2 weeks. It currently trades around $0.024. Global Media has a price target of $0.10 on the stock. Another analyst firm has a 1 year target of around $0.58. I have no idea when I’m going to sell AERS but I can tell you, I’m not going to sell yet. In fact, I’m accumulating more of AERS every couple of weeks on pullbacks.
Top Performing Penny Stocks Week of July 16 2012 – July 20 2012
Last week’s TICK animation as you will see below, has detected institutional trader buying on Friday, July 13, 2012.
The S&P 500 was on its longest losing streak since May making lots of bargains available. As one financial manager said, “At some point you need to start putting your cash to work.”
The big news on Friday came from J.P. Morgan that showed the huge losses they suffered a few months ago was indeed an isolated event. For the quarter, J.P. Morgan reported $5 billion in profits sending institutional traders in to bottom feed off the beat up financial sector.
An interesting contrast took place between Thursday and Friday of last week. It seemed like Thursday had a big sell off, then Friday have a big bounce; however, that is mostly incorrect as it applies some degree of equality between the two trading days. Because we track the TICK, we know what market makers were able to match up a buy order with a sell order a lot easier on Thursday which suggests the selling had a non-institutional trader origin. Friday though the TICK went above +600 which means the market makers had a much more difficult time matching up buy orders with sell orders. This suggests buying across entire sectors which is mainly done by institutional traders.
If you are new to stock trading and looking to learn more about the indicators used in stock market analysis, you have come to the right place. There are several methods available for use, however, if you are just getting started – the following 3 stock market analysis indicators will help you learn exactly how the stock market is played.
What is Stock Market Analysis?
Stock market analysis is one or more methods used by traders in which they gain a better understanding in how the stock market functions. These methods are primarily used in determining price movements in a market and will essentially help traders in making better trading decisions.
3 Stock Market Analysis Methods and Indicators for Dummies
1. Graphs and Charting
Perhaps the most widely used technique in stock market analysis. In this method, information is collected over a period of time and on a later stage – used in a visual way which gives traders the flexibility of researching ups and downs in certain shares. The information collected is factual and is used in order to help traders understand how certain shares could impact their own shares. This said, traders will also better understand price movements in the market.
2. Relative Strength Index (RSI)
The RSI basically measures the speed and change of price movements in a given stock. The typical value of the stock is calculated by using the value of a stock during good days and the value of a stock during bad days. Generally, movement will range between 0 and 100. The stock will be considered oversold when RSI is below 30 and overbought when the RSI is above 70.
3. Moving Averages
Moving averages are very popular among newbie traders – for good reason. In addition to their ease of use, they are also well known to give clear indication when to buy and sell a given stock. In this method, no price direction is predicted. Moving averages are based on previous prices.
If you would like to make better trading decisions – it is important that you incorporate stock market analysis as part of your trading strategy. In doing so, not only will you be given much clearer entry and exit signals, but you will also be on your way to actualy making money in the markets.
Alrighty then… nothing to sugarcoat here. Today was a bloodbath in the CORN option, pure and simple. I’m sorry guys, I got stopped out of CORN for a 23% loss today. After making 70% in June, I knew I was overdue for a loser but I hoped when we finally got hit with one, it would be just a little 5% to 10% loser instead of a 23% loser.
Trust me, I’m not trying to pretend there is some sort of “silver lining” to this awful loss I took today on CORN calls. But we might as well go over some valuable trading ideas that should be discussed here.
First, you have to set a stop loss. For option trades, my stop loss is 20%. My normal stop loss is 5% but because options are more volatile, you have to widen that stop.
I should have known better than to enter a call option on a gap up. This is what usually happens to gap up open stocks:
1. They gap up severely, where often the open is the high of the day or very close to the high of the day. That means your order, if you enter it pre-market or right at the open, is likely to be executed at the worst (highest) price of the day.
2. Then, since the stock opened up too high…there is nowhere to go but down because pre-existing shareholders want to sell at that high price, shorters want to short at that high price, etc.
3. Then downward momentum starts, and the traders who bought into the high gap price see how bad it’s doing, and they start selling, driving the price even lower.
That’s exactly what happened in CORN since Monday.
It’s my fault for buying on a gap up open. I think I fell in love with “the story” of CORN and attempting to make money from the weather. I mean how cool that would have been. Instead, the high pressure areas over the midwest are starting to move now and it is forecasted that some rain storms will move in over the next 2 weeks. In fact, there’s now a 30% chance of rain in parts of Iowa this weekend. Also, a huge low pressure system has moved in off the West coast that stretches from Washington all the way down to Baha California today.
However, with the worsening drought and the strong uptrend in corn, I thought we still may have a strong winner from my entry on Monday’s gap up open. It seemed like a solid candidate for a profitable play. Especially given that the mainstream news services are only beginning to talk about the midwest drought now.
But like I always say, forget the hype, forget the news, forget the PRs, all that matters is how the stock trades… and Monday’s alert couldn’t have traded any worse. If it traded this poorly today even when the USDA report, released early today, detailed a 12% reduction in acreage yield for corn, in my personal opinion it’s time to move on and look for better opportunities.
Jedi Luke alerts can be winners, and can trade very well. I’ve seen countless winners from Luke and many like his SONC or Apple call options deliver monster profits. But the bottom line is this is stock trading folks and all alerts simply do NOT have the same profit potential across the board.
Now some shady market analysts that you’ll find over the Internet fudge their numbers and say “I got out at break-even” when in truth they lost along with everybody else.
You’ll find the majority of analysts who will talk about a stock chart, say of SPY, but will never actually show you how they can really make money with their chart reading ability. You know what I’m talking about. Those guys like John Murphy who say, “Well, we just talk about the market we don’t actually give stock picks”. What a cop out. If they were such good chart readers why wouldn’t they help people make money with stock picks? And then their answer to that is, “Well, we can’t legally give stock advice per the SEC.” That’s true, but they can talk about what they themselves are buying and then it’s up to their listeners whether they want to buy the same thing. But they don’t want to do that because they know that they aren’t very successful as traders and if enough people knew that, they’d lose their business.
At least I’m not one of those guys, and I don’t pretend like my losers are winners. In fact, I don’t pretend to be anything. My goal is to be as honest and transparent with you as I can because I think you demand nothing less when it comes to making money at stock trading.
The point and figure chart has become well known as one of the most effective systems used in determining great entry and exit points in stock market trading today. If you find yourself being keen on learning more about the point and figure chart, you have come to the right place. Here we will take a closer look at how to read, draw, and how to use the point and figure chart in your own stock trading venture.
What is a Point and Figure Chart?
The point and figure chart is a charting method that is commonly used by traders attempting to predict financial markets. Unlike most other techniques in technical analysis, the point and figure chart plots the price against directional change instead of price against time.
How to read a Point and Figure Chart
Stock traders will agree that the supply and demand of a stock is what ultimately determines the price of a stock. This said, reading a point and figure chart is as easy as 123. If the given stock has a rise in price and you have an uptrend in place (three or more Xs), then demand has overcome supply. Reversal is when the chart relects three Os. This will indicate that the supply has overcome the demand.
How to draw a Point and Figure Chart
In general, the correct way of drawing a point and figure chart is to plot each individual price change manually. However, many traders have turned to using summary prices (end of day prices), instead of facing the nightmare of plotting a large quantity of stocks. In order for you to draw your own point and figure chart, simply follow these steps:
1. Construct a price unit on your graph paper. This unit should be represented by a single box.
2. Decide which value should be represented by X and O
3. Draw and place your X in a box to indicate upward movement or an O to indicate a downward movement.
4. When the price changes direction by the value of a certain amount of Xs and Os – simply create a new column. This means that a price reversal has occured.
It is already an estalished fact that a point and figure chart can help traders determine good entry and exit points (buy and sell points), in the market, essentially allowing the trader to trade with more objectivity. Here are some point and figure chart patterns along with their resulting trade signals:
Buy Signals (entry) – Buy signals are indicated by a higher bottom followed by a higher top. Examples of such sigals may include: double top, triple top, bullish triangle, low pole, and bullish catapult.
Sell Signal (exit) – Sell signals are generally indicated by a lower top followed by a lower bottom. Examples of such signals may include: double bottom, triple bottom, bearish triangle, high pole, and bearish catapult.
Advantages of a Point and Figure Chart
The point and figure chart has many advantages, some of which includes the following:
- Simple to understand and use (beginner friendly)
- Only price is plotted (excludes the plotting of time)
- Only price reversals matter
- Indicates clear buy and sell signals (entry and exit points)
- Trends are much easier identifiable
By familiarizing yourself with the point and figure chart system – you are bound to achieve success in your own stock trading ventures. Here, not only will you be able to see buy and sell signals more clearly, but but you will also be able to identify market trends much easier and make better trading decisions, essentially helping you achieve your goal in making money on the markets.
My inbox has exploded with emails regarding how my trader buddy Mike got knocked out of the stock market last week.
I’m really touched by the outpouring of sympathy and condolences from many of you and I will make sure to pass them on to Mike.
It was really a sad and touching experience to see Mike’s eyes tear up as he told me he was wiped out of the market on his TVIX trade that went bust.
When you spend years building up your trading account and then have it wiped out like that, it’s heart wrenching.
I’m really moved by the sympathetic emails I’ve received. You and I may disagree, but when one of us gets wiped out, we all pull together. It’s just amazing for me to see that.
Mike and I have a boss at our day job who is an old school gold bug. Our boss has mastered the Jedi Mind Trick and is as tough as they come. He’s a man that many office staff tremble in fear when he walks by their desk. He’ll tell you which way the cow went and he’ll tell you in a hurry. Our boss is so tough that when he does a pushup, he isn’t lifting himself up; he’s pushing the Earth down. Office rumor has it that once a cobra bit his leg. After 5 days of excruciating pain, the cobra died.
Once a week, I meet with the boss and perform stock analysis on his portfolio. When I told him about Mike getting wiped out, he paused for a second then said he was sorry to hear that. That was incredible to hear that because we trade so differently. We’ll argue and debate the merits of buying gold versus buying stocks. We’ll get mad at each other and not talk for awhile. We’ll give each other news clippings until one of us gets mad and says he doesn’t have time to read his BS. But if one of us makes a mistake and gets wiped out, we put our differences aside and come together to support our fallen comrade.
I think back when I lost $10,000 in a penny stock scam called Plasticon. I felt horrible. I didn’t want to tell my wife because I was afraid that she would think I was so stupid. I had big plans and dreams for that $10,000. It was going to be my seed money for a house for my growing family. All of my hopes and dreams were crushed as Plasticon shares dropped to zero and trading was halted. The SEC moved in and returned as much money as they could to Plasticon’s creditors. Share holders got shafted. I then lived with the embarrassment for years where at family functions family members I hadn’t seen in awhile would ask how my Plasticon investment was going? I still feel horrible to this day when thinking about it.
In the video episode below, I’ll show you the chart of TVIX so that you can see what happened to Mike.
A famous trader once said, the only reason I didn’t make even more money in the stock market was because of my winners. Think about that for a second. Here’s a famous trader, famous for his winners, and yet he viewed his winning trades as a liability because he knew that the best lessons learned are the really painful ones.
Did you know that all, I mean ALL the best traders in the world who have ever lived, they ALL wiped out their trading accounts at least once, and many two or three times?
I feel a comradery with other traders who have gone through the pain of losing everything. I think alot of us do. Our better nature as human-beings relates to the pain someone is going through when they lose everything. In all respect, I say welcome to the losers club.
I’m willing to bet that if I did a poll right now of everybody who is watching this video and whether or not they have lost everything at some point in their trading, I bet that 80% of you would say yes. I know, it’s not something we like to talk about because the memory is painful.
Once you lose everything, you have two choices, two paths in front of you. One path is to denounce stock trading as a scam, blame it on HFT or algorithms or grey markets or the rich bankers, or Goldman Sachs, or whatever really scary thing you can think up and to justify why you lost money and why you quit trading. That’s the easy path to take that most people do take. The other path is harder. The other path is to look at yourself and admit to yourself what you did wrong on the trade. Did you put all your eggs in one basket? Did you not set or not stick with a stop loss? Did you just drink too much Kool-Aid on that one? Whatever it is, you critique yourself and find your flaw. You then go through the hard task of re-building your trading account and getting back up on the market bull that bucked you off and almost killed you. Your desire to be independently wealthy and trade for a living from home drives you with it’s single powerful call: live free or die trying. You now understand with greater clarity the tag line on my blog that reads: “Live Free Or Die Trying”. That’s the kind of determination you must have if you are to get better at stock trading.
I’ve come to feel like most of you are family and I wanted to say thank you for your kind words and support regarding Mike. I’ll make sure to pass on your sympathy and condolences.
Institutional buying was detected on Monday July 2, and Tuesday July 3rd 2012.
One of the things I’ve noticed this week is that the mainstream media groups like CNBC, the Wall Street Journal, and Fox News report the drop in oil as something bad because of manufacturing slowdowns in the U.S. and China; however, institutional trader activity indicates otherwise.
Institutional traders are picking up their buying on the drop in oil prices because a drop in the price of oil is the #1 way to stimulate an economy. In fact, Stephen Leeb wrote a book on the subject and proclaimed, “It’s all about the oil dummy”. He noted that every bull and bear market cycle since the 1940′s has been predicted by the price of oil.
This difference in perception between the public viewing the drop in manufacturing and hence the drop in demand for oil as a negative factor, institutional trader activity suggests they believe just the opposite and are increasing their buying on the drop in oil.
Institutional buying on Monday and Tuesday tracked and timed with news released from financial institutions suggests the reason for buying was:
July 2nd Monday – M&A activity in Tech: Dell buys Quest for $2.4 bln, Micron buys Elpida for $2.5 bln. Manufacturing data showed normal seasonal slow down with index drop to 52.5 in June but still above 50 which indicates expansion. 10 year treasury yields dropped to 1.58% on manufacturing slow down indicating little if any flight to safety. Oil drops $1.21 on manufacturing slowdown in China and U.S. oil drop is stimulus for economy, always leads to major Bull market eventually.
July 3rd Tuesday – Toyota U.S. June sales surge 60% YOY. Surprise jump in May factory orders of 0.7%, economists expected 0.1% increase.
Institutional buying on Monday and Tuesday was primarily concentrated in the following sectors:
#1 = Energy (+2.39%)
#2 = Materials (+1.42%)
#3 = Industrials (+1.05%)
#4 = Technology (+0.8%)