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3 Ways to Beat the Stock Market

3 Ways to Beat the Stock Market
Stockscores Foundation for the week ending April 1, 2019

In this week's issue:




In This Week’s Issue:

  • Upcoming Events – Webinars and Live in Calgary and Vancouver
  • Stockscores’ Market Minutes Video – Add to Your Winning Trades
  • Stockscores Trader Training – The 3 Ways to Beat the Stock Market
  • Stock Features of the Week – Action Breaks

 

Upcoming Events

I have quite a few webinars and some live presentations in Vancouver and Calgary coming up over the next month and you are all invited to attend. Here is a link to the registration page, hope you find them valuable.

 

Tuesday April 2 6pm PT – How I Search for Stock Investing Opportunities

Click here to register

 

Tuesday April 9 6pm PT – Day Trade Review

Click here to register

 

Wednesday April 17 7pm MT – How I Trade the Stock Market, Live in Calgary

Click here to register (after registering the page will jump back to the Stockscores site with no confirmation but you are registered!)

 

Tuesday April 23 7pm PT – How I Trade the Stock Market, Live in Vancouver

Click here to register (after registering the page will jump back to the Stockscores site with no confirmation but you are registered!)

 

To see more upcoming webinars, Click here

 

Stockscores Market Minutes – Add to Your Winning Trades

When you have a winning trade, add to the position! This week, I show how to do that and then provide my weekly analysis of the stock markets. I do a Market Scan in search of trading opportunities and look at the trade of the week on VKTX.

 

Click here to watch

 

To get instant updates when I upload a new video, subscribe to the  Stockscores YouTube Channel

 

Commentary of the Week – The 3 Ways to Beat the Stock Market

What do I mean when I say, “beat the market”? Simply, it means earning a return that is greater than the market’s return. Historically, the average market return is about 8% but some years are better than others. If the market goes up 10% and my stocks go up 20%, I have beat the market. If the market goes down 10% and my stocks go down 5%, I have beat the market.

 

To beat the market, we have to do one, or all, of three things.

 

Sell Greed

Investors tend to chase after strength. We believe a company business is better when the stock is going up and if we think the company is good, we want to buy it regardless of price. This is called the law of upticks.

 

The result is that stocks are pushed up too far and, eventually, they have to correct downward. This creates an opportunity to short sell the stocks that have gone up to irrational price levels when they show signs that they are likely to correct.


The best signal that this is going to happen is to look for stocks have parabolic shaped upward trends and short them when the upward trend line is broken.

 

Buy Fear

Just as emotion can send stocks up too much, it can also send stocks down too far. This is one of the hardest ways to make money in stocks because our intuition and emotional state will have a very hard time stepping buying in a falling market. Trying to catch a falling knife is a difficult thing to do.

 

Therefore, don’t try to catch a falling knife, wait for it to bounce off the floor first. This means waiting for panic selling to stop with a break of the downward trend line.

 

Fear based selling, especially when it is a correction of the overall stock market, create opportunity because everything is sold without much thought about the prices that are being accepted. When investors are feeling a knot in their stomach, they exit just to make the pain go away.

 

Consider the correct that we had at the end of 2018. Everything was sold lower but, when the downward trend line was broken on Dec 26, prices started an amazing recovery that rewarded those who could buy when everyone else was in a state of panic.

 

Trade on Inside Information

This sounds like a fast way to go to jail, but it does not have to be. The stock market is not fair, some people get better information than others. They may get their better information because they are experts in an industry, have great sources for information or do really good analysis. Usually the people with the best information are also the largest of investors with greater resources to uncover facts that most investors are not aware of.

 

When they know something important and act on that information, they create abnormal trading activity. This is the basis of my Action Candle indicator. It can be applied to any chart time frame to identify when there is abnormal buying. It is a tool for following those that have the best information and is extremely useful when combined with some other simple chart reading techniques.

 

Therefore, any trader who watches for the signs of investors buying with better information can benefit from their information without knowing what it is.

 

What ever your trading approach, focus on these three types of trading opportunities, combine them with focus and discipline and you will be well on your way to beating the stock market’s returns.

 

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This week, I showcase a few stocks that made Action Candles on the daily interval last week and have decent chart patterns.



1. LLNW
LLNW triggered an Action Candle on Friday. It is pulling back today so wait for a break of the pull back to consider.

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2. ALKS
ALKS came alive on Thursday and has been holding up well since indicating that the sellers are not too motivated yet. We may see a little bit of a pull back but worth considering as long as it can hold above $33 support.

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3. NM
NM has had some bursts of volume over the past month and did so again on Wednesday. With a recent break of its downward trend, this could be a good bottom fish.

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References

Disclaimer
This is not an investment advisory, and should not be used to make investment decisions. Information in Stockscores Foundation 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 this newsletter 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.

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