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The Only Thing that Matters in Stock Traeding

The Only Thing that Matters in Stock Traeding
Stockscores Foundation for the week ending February 14, 2022

In this week's issue:

In This Week’s Issue:

  • Stockscores Market Minutes Video – Will Inflation Cause a Stock Market Crash?
  • Stockscores Trader Training – The Only Thing that Matters in Stock Trading
  • Stockscores Strategy – Stockscores Simple Canada


Stockscores Market Minutes – Will Inflation Cause a Stock Market Crash?

Recent market weakness has been motivated by high inflation. This week, I look at whether inflation will induce a stock market crash. Then, I analyze the stock, currency, interest rate and commodity markets. The day trade of the week on Z and a Market Scan in search of stocks to buy.


Click here to watch this week's Market Minutes video


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Commentary of the Week – The Only Thing that Matters in Stock Trading

In many areas of life, we can get by and even succeed by fooling others. There are some who speak well, went to the best schools, or live at the loftiest address. Social media is littered with people who portray images of success, driving expensive cars, looking beautiful or vacationing at exotic locales. Their “followers” aspire to their success without much critical thought about whether that success is real. It is appearance that matters and it often fools people into believing the stories that they tell.


Politicians excel at this sort of misdirection. They often use words to arouse fear or greed or legitimize questionable policies and can quickly pivot when voter sentiment turns against them. New words can cover up prior deceit. Old mistakes can quickly be forgotten.


In stock trading, there is only one thing that matters.


Being right.


There is nowhere to hide. Our success or failure is captured in every trade. There are no mulligans or ways to bend the truth. If we consistently profit in the market, we are good investors. If we are consistently wrong, we face emotional and financial punishment. It is the purest of occupations.


To be successful in trading, being right is all that matters. How well you know finance and economics does not matter. The information that you can share at parties may impress your friends, but they do not attest to your investing acumen. Whether you sound smart or stupid has no bearing on your performance.


Part of being right is being wrong some of the time and adjusting to make a correction. Falling in love with a company’s story can lead you down the wrong path, unwilling to waver from a bad decision and destined to take on a much larger loss. Being right means being humble and able to admit to being wrong. Never double down on being wrong.


There will be times when it will feel that you can do no wrong in the market. In a hot market, everyone is a genius, leading to a false sense of security that will surely bring harm when the trend reverses. Being right is not about your last trade, it can only be measured over a large number of trades over different market conditions.


Each trader must simply strive to be right. Not on each trade, but over many. And when the market proves you wrong, have the strength and emotional control to admit the error and accept loss.


Trading success requires a consistent record of being right, measured entirely by the appreciation of your trading account.

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The Stockscores Simple Market Scan seeks stocks with a Sentiment Stockscore of at least 60 and a Signal Stockscore of at least 80. These scores are based on the elements of charts patterns that matter. Abnormal price and volume activity, trend and price breaks from low volatility through resistance are all factors that get points in the scoring model. The Stockscores are a useful way to find stocks that are more likely to go higher than lower.

This week, I ran the Stockscores Simple Canada Market Scan and reviewed the charts of the 16 stocks that it revealed. Here are three that are worth considering:

1. V.B
V.B is breaking out through $0.24 resistance on much stronger than normal volume. The stock is very speculative and is not too liquid but the long term chart pattern is excellent, giving it a 70% chance of going higher. Support at $0.14.

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2. T.GTE
T.GTE has been moving up for the past month and is showing a good turnaround chart. Given the recent gains, I think a pull back in the short term is likely and would prefer to consider the stock on a break of such a pullback. Support at $0.95.

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3. T.ABX
T.ABX broke its 3 year weekly downward trend line last week and looks to be starting a long term turnaround. For an investor interested in a little bit of dividend yield (1.89%) and the potential for capital appreciation, I estimate this one has a 65% chance of moving higher in the months ahead. Support at $23.40.

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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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