Three More Ways To Profit From
TradingMarkets
Last week we looked at putting together a nightly
plan for your trading using some of the features available on TradingMarkets.
This week, I want to briefly add three more things for you to look at to help
you improve your trading.
Trade Multiple Signals
Many successful traders have said this before me, but one of the things you
would like to see is multiple indicators all pointing in the same direction. The
more confirmation you have, the better the chances that the signals will be
correct.
One of the features we have on the TM site is our
Indicators At A Glance page.
This page looks at all the stocks that show up on our indicator lists. Look at
the left-hand side of the page. There you will see a number. This number tells
you how many lists that stock shows up on. For example, last Thursday July 29,
was a fairly good day for the market. The Nasdaq was up over 1% and the S&P and
Dow also moved higher. The evening before, there were only a couple of stocks
which showed up on 3 lists (three lists is a significant amount). And one of
those stocks stood out. That stock was Energizer (ENR).
Why did it stand out? Two reasons. The first is
that it was the only bearish stock on three lists. And second, Energizer did
something that we talked about in a previous column...it missed its numbers in a
downtrending market. In 2000-2002, companies that missed their numbers were many
times punished not only the day they missed, but for days to follow. And we're
now seeing the same behavior occur again.
The lists that Energizer showed up on were all bearish lists. They were the
TradingMarkets
Proprietary Implosion list, the
New 60 Day Lows on Double Volume
list, and
the "Stocks Crossing Below Their 50 Day Moving Average
list. Each, on their
own, is somewhat significant. When combined, even more significant. And when
combined with the negative news from that day, potentially very significant.
On Thursday, Energizer started the day as if it really was energized by rising
nearly 2%. But then the selling came in, and before you knew it the stock lost
more than two points from its high and closed down 2.75% for the day, in spite
of the overall market ending higher.
Is this search method perfect? Of course not. But, using this page wisely helps
you quickly find good names to trade for the upcoming day. And the more times a
stock shows up on a list, combined with confirmation with your own indicators
and research, the better the potential exists for the stock to move in your
favor.
Timing The Market For Intermediate-Term Traders
We have a great deal of research on the site for timing the market on a
short-term basis. But, we also have research and indicators that guide you on an
intermediate-term basis. As you've heard me say many times, markets move stocks,
not vice versa. And if you can correctly identify the direction of the market,
it likely increases the potential for success in predicting the direction of
individual stocks.
In our Indicators section, look at the Market Timing Section (near the top).
Then click on the
Intermediate-Term Timing Models link. There you will find 4
timing models that were created by Hedge Fund Manager Mark Boucher. Each
of the models presented have over two decades of performance behind them. The
first model -- the Nasdaq % model -- uses momentum in the Nasdaq market to help you
enter in the direction of the trend. The Bond Index ROC model uses the rate of
change in interest rates to help guide you as to where the overall market is
heading. Mark's third model combines the first two models in order to gain
further confirmation. His fourth model uses completely different indicators and
it acts as a confirmation for the other models. What's interesting about this
model is that today it's signaling a buy signal while the other three are
signaling sells. Is this contradictory? No. According to Mark, when this occurs,
it's signaling that the market is giving mixed signals and to use caution.
Ultimately, these mixed signals will work themselves out and provide clearer
guidance as to the potential direction of the market. Ideally, you'd like to see
all the signals pointing in the same direction. That would tell you to become
aggressive in investing in that direction of the signals.
This page is updated each night and we recommend you taking the time to check
the signals on a regular basis. Much research has gone into them and in our
opinion, it's more structured and better researched than listening to the
guesses one hears on television each day.
Trade Pullbacks On The Short Side, Especially In A Bear Market
If in fact we have moved into a longer-term declining market, the easier money
will be made by traders on the short side of the market. One of the better ways
to find trades on the short side is to find strongly downtrending stocks that
have rallied over the past few days. These have historically been the better
candidates to enter the market on the short side. This concept has been
mentioned for decades and it's been confirmed statistically in "How
Markets Really Work."
From the stocks/indicators page click on
Pullbacks From Lows in the Downtrending section. There you will find up to 20 strong downtrending stocks
that have had a recent rally. From there, you can use your favorite entry
technique in order to short the stocks if and when their longer-term trend
resumes. As with any trading strategy, just make sure you are using proper stops
and risk controls. Yes, stocks usually do drop faster than they rise, but the
rule is that you must have stops in place on every trade. This list also updates
nightly and is especially valuable for those of you who are short-term traders.
Wrap Up
Beginning this Wednesday night, and going forward every Wednesday night, our
editor-in-chief, Brice Wightman, and I will be publishing a new weekly trading
column which will focus on specific ways to profit from the TradingMarkets site.
Whether you're a day trader, swing trader, intermediate-term trader, stock
trader, options trader, e-mini trader, futures trader or Forex trader, there
will be something there for you.
Have a great week trading (and if you have any questions please fell free to
email them to me at
lconnors@tradingmarkets.com)!
