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Back to Basics in Stock Trading

Back to Basics in Stock Trading
Stockscores Foundation for the week ending April 1, 2024

In this week's issue:

In This Week’s Issue:

  • Upcoming Events – April Webinars
  • Market Outlook – Broadening of Optimism
  • This Week’s Market Minutes video – My 3 Must Know Stock Trading Secrets
  • Trader Training – Back to Basics
  • Strategy – Abnormal Stocks in Play


Upcoming Events – Education Webinars in April

Simple Strategies to Find Hot Stocks and Avoid Stock Market Crashes

Saturday, April 06, 2024 10:15 AM PT

Day and Swing Trading for Full or Part Time Income

Wednesday, April 10, 2024 6 PM PT

How to Invest in the Stock Market Successfully

Thursday, April 11, 2024 6 PM PT

How Stockscores Tools and Education Can Help You Make Stock Market Profits

Saturday, April 13, 2024 10:00 AM



Market Outlook – End of the Quarter, Earnings Start in Two Weeks

Upward momentum continues in all North American stock markets and the strength in individual stocks is broadening. Where the gainers were mostly in the large cap tech sector, I am now seeing improving optimism in more and more stocks. Day and Swing trading has good opportunities each day and there is improvement in the Position trading area as lower priced, small cap stocks are getting better. Precious metals, Crypto, Cannabis, Artificial Intelligence and Alternative Energy are the sectors showing the most strength but each day there is a new list of hot stocks that can be traded.


This Week’s Market Minutes video – My 3 Must Know Stock Trading Secrets

Profitable trading requires you to focus on 3 simple concepts for success. This week, I walk you through them, provide my analysis of the overall stock, commodity, crypto, and bond markets, and look at the trade of the week on OTRK.

Commentary – Back to Basics

Over 30 years of trading, thousands and thousands of trades and many 10s of thousands of hours looking at stock charts. You might think that this has lead me to extremely sophisticated or complex analysis, difficult for most people to understand. Instead, it is quite the opposite. I find that the simple things continue to work the best, here is a breakdown of the Basics.

Focus on Abnormal Activity – to beat the market, you have to trade Alpha stocks. Alpha stocks are those that come alive with abnormal price and volume activity and strong liquidity. Find the stocks that are just starting to attract a crowd but before everyone knows about the stock.

Practice Good Risk Management – losing is part of successful trading. Good traders don’t take big losses. This means sizing your positions to reflect the risk and planning to lose at the price point where the market will have proven you wrong.

Be Patient with Winners – since we are all going to take some losses, we must also ensure that our winners pay for our losers. Don’t sell a winning trade because it feels good or because of a fear that the winner is going to turn into a loser. Practice good exit strategy and hold on to the winners as long as they are trending higher. Exit when the trend is broken and an exit signal is triggered. Remember that up trends start slowly and end quickly so be patient with a stock when it is just starting to gather momentum.

Don’t Listen to What People Say – I never read news, listen to stock tips, trust the advice of others. The only thing that matters to me is what people are DOING with their money, not what they are saying. If the stock is going down, there is something wrong, no matter how good the story sounds. Buy stocks that the market is optimistic about, not those that are in the control of the sellers.

Avoid FOMO – the Fear of Missing Out is one of the biggest reasons aspiring traders fail. We must not chase strength, even when our emotions are telling us to buy because the stock is going up so quickly. Buy breaks from low volatility or breaks of pullbacks in longer term upward trends. Don’t chase parabolic trends.

These are concepts better explained visually, so be sure to join in for the week of free webinars, I will show you in greater detail how to use these concepts.

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Alpha stocks are those trading on their own story and are easily found by looking for stocks making price gains with abnormally high volume. The Stockscores Market Scan has filters to search for stock fitting these criteria and today, I ran a scan for those with Abnormal Price Gain, Abnormal Volume and at least 10000 trades. 16 stocks were found, which I then inspect their charts to see if they are showing a surprise break that indicates investors are excited about something the company is doing. Here are three that are worth watching for trading opportunities in the near term.

SGRP is trading very strong and abnormal volume today with a strong price gain. I would like to see the stock quiet down with a pullback and then come alive again as a signal that it is going to make the next leg up.

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TPST came alive mid-day with strong and abnormal volume and a good price gain. I like the daily chart, as it shows the stock breaking out of a sideways trading range with surprise strength. Support at $3.50, it is a bad sign of the stock falls below that level.

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CXAI is the hottest stock in the market today with strong gains on very high and abnormal volume. I think this stock is best considered for short term traders who can play pullback or pattern breaks on the 1 minute chart. Good risk management is a must as the stock is very volatile, don't chase strength but rather consider upside breaks of pullbacks.

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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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