Stocks & Equities
In This Week’s Issue:
- Weekly Commentary
- Strategy of the Week
- Stocks That Meet The Featured Strategy
Stockscores Market Minutes Video – Profit Clumps
Profits from the market don’t come in a predictable, steady flow, they come in clumps. That plus this week’s stock market analysis. Click Here to Watch
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Trader Training – Simple Rules of Chart Analysis
Stock charts tell me everything that I need to know to do my analysis. They tell me how people feel about a stock, whether there are good things happening within the company’s business, how the economy is affecting the company and, most importantly, what the potential for price change is.
Here are some simple rules of chart reading that I think anyone analyzing charts should keep in mind.
Prices That Fall in to Support Will Bounce at Support
Support and resistance are important concepts of chart analysis. Support is a floor price that has been formed by the market over time, it is a low price point where the price trend stopped going down and started to go up. Chart readers look for breaks through support as a signal that a down trend is beginning.
However, that is not always the case. If a stock’s price is falling day after day, it is likely to bounce around support but it may go through support temporarily. Therefore, don’t short breaks through support if the break comes after a number of days of downward price movement. Prices in free fall will usually bounce around support.
Prices that Consolidate Before Breaking Support Will Trend Lower
Here is how to apply the sell on a break of support rule. If prices are trending sideways with relatively low volatility at or near an area of price support and then make a downward move through support, the stock is likely going in to a downward trend. The difference here is that the downtrend is just starting with an initial break through support.
You can reverse these rules for resistance and upside breakouts as well.
Breakouts From Low Price Volatility are Reliable
What does it mean when stocks trend sideways with very little price volatility? It is more than just a boring chart, it means that buyers and sellers agree about what the stock is worth. It is a display of confidence in the value given to the stock.
Therefore, if the stock price breaks from this period of confidence, it implies that there is new information that justifies the price move. This usually comes in the early stages of a trend; as more investors learn about the new information, more people will jump in to the stock and carry it farther along its trend.
This means that identifying breaks from low price volatility is an important way to catch market beating trends early.
Prices That Run Away From the Trend Line Come Back to the Trendline
In the long term, prices tend to trend in a linear fashion. That means you can draw a straight line across the bottoms of an up trend or a straight line across the tops of a down trend.
However, along the way, prices will often move away from this straight line. This happens because investors get emotional and either chase the stock higher with greed or force the stock quickly lower with fear.
The emotion eventually comes out of the market, bringing the stock back to that linear, straight trend line.
This means that we should be aware of a short term price reversal the farther prices get from the linear trend line. A stock that runs away to the upside will eventually come down on a pull back. Prices that fall too quickly will eventually come up.
This rule works best with up trends, which tend to be more orderly and longer lasting than down trends.
All Available Information Is Shown In the Chart
Traditional investors who have heard me talk about the markets often shake their heads when they hear that I do not do any research in to what the company does before I buy a stock. They find it hard to believe that I can make money trading nothing more than the chart.
The chart of price change shows us every bit of fundamental information that is known by the market. Since most investors are acting on information to make their decisions, reading a chart is essentially reading their perceptions of the information that they have. A company that is doing well within their business will have a good looking chart because investors are pricing in the positive new information.
Falling Tops Are a Sign That Investors Are Pessimistic
If investors believe that there is something wrong with a company’s ability to make money in the future, they will drive prices lower over time. This pessimism is best seen visually in a chart by looking for falling tops. The falling tops on the chart show that every time the buyers are able to push prices up, they are unable to push prices as high as they had the previous time. That is a sign that the sellers are in control of the market.
Rising Bottoms Are a Sign That Investors Are Optimistic
Conversely, if the bottoms are rising on the chart, investors are optimistic and the buyers are in control. Each time the sellers are able to push prices down, they are unable to push them down as much as they had the previous time.
It is best to only buy stocks that are in the buyers’ control.
Up Trends Start Slowly
A stock that has been an under or non-performer will have investor’s doubt any time it shows some strength. Investors tend to judge a stock by what has happened in the past rather than what they expect for the future. The result is that stocks that are starting upward trends tend to do so slowly because investors doubt that the company deserves to go higher.
This means you have to be patient with up trends that are in their early stages as they will often have false starts. Doubting investors who own the stock will sell in to strength, not realizing that the company’s future is brighter than it has been.
Action Candles are those that make statistically significant price movements on abnormal volume. You can find these stocks using the Stockscores Market Scan by activating the Abnormal Price and Abnormal Volume filters. Stocks that show Action Candles from predictive chart patterns are good candidates to outperform the market. Here are two stocks that I found today with nice charts:
1. ACTA
ACTA has made a strong gain today which sets up a nice long term trend reversal pattern on the weekly chart.
2. KNOP
KNOP is breaking from an ascending triangle pattern on the daily, giving it a break from a rising bottom on the weekly.
Alert: Don’t miss Michael’s great interview with the highly regarded Greg Weldon: On The Brink of Soaring Move In Gold & Silver
References
- Get the Stockscore on any of over 20,000 North American stocks.
- Background on the theories used by Stockscores.
- Strategies that can help you find new opportunities.
- Scan the market using extensive filter criteria.
- Build a portfolio of stocks and view a slide show of their charts.
- See which sectors are leading the market, and their components.
Disclaimer
This is not an investment advisory, and should not be used to make investment decisions. Information in Stockscores Perspectives 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 Perspectives 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.
The networks say this past Monday’s first presidential debate was the most-watched TV event of all time. Over 100 million tuned in when the debate started at 9:00 pm EST.
I think the number was much higher, perhaps 200 million or even 300 million, when counting the rest of the world and multiple people watching the same TV.
Trump is crass, rude, a liar and a BS artist. But he’s pushing the right buttons of the American population and has been all along.
I anticipated as much way back in 2013 when on the Weiss Wealth cruise, I announced the rise of my war and geopolitical cycles and warned of rebellions and antiestablishment moves, not to mention outright revolutions and wars in the years ahead.
What Trump’s popularity is telling you is precisely that for the U.S.: It’s time for a revolution. The majority of average Americans want to get rid of the old, the status quo and bring in the new, from outside the establishment.
What that “new” will be, only time will tell. And despite losing the first debate …
My Models Predict Trump Will Win the White House
It has to do with my cycle work and the convergence of several important economic and geopolitical cycles that is occurring now and will continue as a Category 5 hurricane for the entire globe heading into 2020/21.
For the world is facing the worst of times, even worse than the Great Depression. And there is only one of the two potential leaders who fits that bill, and it’s Donald.
Yes, I believe Hillary would make a better president — even though she too is full of lies, deceits, corruptions, conflicts of interest and BS.
But here’s the thing: If my models are wrong and Hillary wins the office, it won’t change things much at all. The global macroeconomic picture will look perhaps a tad better, but in reality, it won’t be.
The only thing that will change is which investment sectors will do well under either candidate and which won’t.
You can rest assured that I’ll help you with that in my Real Wealth Report and premium servicesthat aim for large speculative gains — as soon as we know who wins in November.
But as I said earlier, Trump is likely to win the White House. Either way, it will be a one-term job, for come 2020, there will be yet another change, probably one that sees the true rise of a third party altogether, the Libertarian Party.
Now, to the markets. It’s already late September and nearly every market my AI models digest continue to point lower into October 6/7.
But we’re running out of time. If we don’t soon see further moves lower in the metals, in stocks and foreign currencies …
Then it will be back to the long side, buying dips and looking for a rally into year-end. Even if Donald wins the debates and the election.
Why? It’s simple. Even with one of the two worst candidates in American history on the edge of taking the White House …
The U.S. economy, property and investment markets will remain magnets for foreign capital fleeing parts of the world that are in much worse shape than the U.S.
Think Europe, who’s going down the toilet with a hair-brained currency experiment, with its strongest economy, Germany, now weakening.
With its huge Deutsche Bank now on the verge of collapsing, and a population now rising up against its once hugely popular Angela Merkel …
And where just over a week ago, German Chancellor Angela Merkel and her Christian Democratic Union (CDU) had its worst-ever election in Berlin when the party was voted out of power.
And replaced locally by the surging nationalist party Alternative für Deutschland (AFD).
Think the Middle East, Syria, Iran, Iraq, Jordan, Turkey, Libya and more. A cesspool of problems. Would you want to keep any money or investments there?
Think Japan, the most vulnerable economy of all.
Or even think China, whose economy remains fine, but whose rich now want to diversify their money out of China as Beijing opens its capital account and currency.
And many other troubled parts of the world, including Africa and Venezuela — a petri dish of what could happen to what I call the “third-world crisis in the first world…”
Or the end of Western-style socialism in Europe, Japan and the U.S.
I told everyone I could almost three years ago that the war and geopolitical cycles were showing a steep rise into 2020/21.
And last year, I showed you how major, proven macroeconomic cycles were also converging to make for a global economic crisis far worse than the Great Depression.
It’s all started, right on time. Either you are going to be prepared for it, or you’re not. If it’s the latter, you stand to lose a majority of your wealth. If it’s the former, not only can you protect your wealth, but you can also grow it over and over again.
Best wishes, as always …
Larry
http://www.moneyandmarkets.com
….also from Martin Armstrong:
Having been bullish for nearly half a year, yesterday Goldman’s flipped again, when it cut its Q4 oil price target from $50 to $43, admitting the previously anticipated rebalancing will take longer to achieve, and now expects “a global surplus of 400 kb/d in 4Q16 vs. a 300 kb/d draw previously.” Moments ago, the same Goldman analyst released a follow up note, confirming what we have been saying for the past year, namely that OPEC is increasingly irrelevant as a marginal supply-setter in a world in which it is the lack of demand that is a far bigger threat.
…also:
The markets have been coiling, and quite frankly, this reminds me of when Pope John Paul II was shot, which was the first attempted assassination of a pope, on Wednesday, May 13, 1981, in St. Peter’s Square in Vatican City. Mehmet Ali Ağca, a Muslim, shot and wounded the Pope while he was entering the square. It did not set off a Christian-Muslim War. I remember the markets back then. This attempted assassination of the Pope followed the attempted assassination of United States President Ronald Reagan on March 30, 1981, which occurred 69 days into his presidency.
When Reagan was shot, the market sold off and made a low that day. When it was clear he was alive, the market rebounded the next day. When the Pope was shot a few weeks later, the markets went dead silent. Everyone was calling everybody, asking, “What do you think?” Nobody knew if it was a buy or a sell. The markets just went sideways. Nobody thought there would be some new Crusade with a clash between religions as we have today.
We are in the Year of Political Hell. Nobody knows what to do for the U.S. presidential elections are destabilizing public confidence. Trump is neck and neck with Hillary, although she is outspending him 10:1. Trump has more individuals donating to him while Hillary has all the bankers, hedge funds, and political manipulators who routinely buy government. She also has the press who support Hillary worldwide. The future is very much up in the air.
Then add the French and German elections next year, and the future is anything but predictable for the average person. This means investment is on hold. People are saving (hoarding cash) and deflation is continuing globally. Meanwhile, we are seeing world trade collapse. This is why the markets have been coiling. Money will not begin to really move until it figures out the direction.
…also from Martin:
Steve Saville: “…there is no limit to how much new money the central bank can create.”
- The Federal Reserve – the central bank of the United States – issued over $16 trillion in loans, swaps, guarantees and more following the 2008 financial crisis. They also increased their balance sheet by nearly $4 trillion – thanks to their (digital) printing press. Much of that newly created currency was used to purchase dodgy bank debt that was worth little. “Money from nothing” is their specialty and they used it to “stimulate” the economy, a fantasy. The ECB and BOJ indulged in the same fantasy/scam.
- The Swiss Central Bank has created billions in new Swiss currency and used that currency to purchase the stocks of corporations. They created the currency from nothing, thereby diluting all existing Swiss currency units, and then purchased assets that have real value. Something from nothing is used by all central banks and is both a fantasy and a scam.
- If the Swiss Central Bank can create currency from nothing and purchase Facebook stock or gold mining stocks, other central banks can create currency from nothing and purchase physical gold from anyone who will sell the metal. Creating currency and using it to purchase gold is a great scam for those who can get away with it.
- A person speaking broken English called a homeowner. He claimed he was from “The Federal Government Grants and Treasury Department” and informed the homeowner that he had been randomly selected to receive a grant from the US government for $9,200. All the homeowner had to do was … something about his credit card … a scam.
- The US government owes nearly $20 trillion in official debt. Unfunded liabilities are considerably more. Total debt in the world, not counting unfunded liabilities, exceeds $200 trillion. If the debt must be “rolled over” but can never be paid, is it real? When will institutions no longer pretend that debt is real and reject the fantasy of repayment?
- If you borrow $10 billion from a friendly banker, spend it on jet airplanes, payoffs for your friends, and a well-deserved month vacationing at the gambling tables in Las Vegas or Wall Street, and have nothing left at the end of three months and no income to repay the debt, is the debt likely to be paid?
Certainly. You will take a $20 billion advance on a credit card.
Certainly. You will borrow $30 billion from another banker.
Certainly. You will borrow $15 billion from the same friendly banker and swear that you will balance your budget real soon.
Absolutely! It is an election year and we will believe anything in an election year.
Maybe not, but we do not discuss these topics in polite company.
- A homeowner received a recorded message from a man claiming to represent the Internal Revenue Service. He spoke in a very authoritarian manner as he informed the homeowner that the IRS had prepared a criminal indictment against the homeowner and that the homeowner or his attorney must call a certain phone number immediately or else the indictment would be filed. The recorded message suggested that non-compliance would result in dire consequences. What this would cost the homeowner was not mentioned in the recorded message but probably would be discussed at the call-back number as the scam progressed.
- A banker owns a vault. Inside that vault are 10,000 ounces of gold. He sells that gold, 100 ounces at a time, to 1,000 investors, assuming that nearly 100% will also pay the banker to safely store the gold instead of the buyers demanding delivery. In simple terms the banker has 10,000 ounces of gold and an IOU to the vault for 90,000 ounces of gold. The banker has an extra $100 million or so from investors for “paper gold” and everyone is temporarily happy. It appears to be a pleasing fantasy/scam.
- A homeowner received a recorded message that stated he was eligible for a $250,000 signature loan with no collateral. The money was supposedly available in two days. It sounded much too good to be true and had to be a scam because it did not originate from a central bank.
- The “War on Cash” has been mentioned often. If banks charge a fee to hold assets in an account (negative interest rates) the logical alternative is to reduce assets in bank accounts and increase cash and gold balances. Gold ownership is already discouraged in the media so the next target is cash – make it illegal or very difficult to hold cash so assets cannot be removed from the banking system. Previous examples of government initiated “wars” have been the “War on Poverty,” the “War on Drugs,” and the “War on Terrorism.” Their success rate has been low and the “War on Cash” will probably be equally unsuccessful.
- Wells Fargo opened 2 million largely unauthorized accounts, paid a huge fine, and fired 5,300 employees “related to bad behavior.” However the executive in charge “retired” with a bonus of nearly $125 million. This was NOT a fantasy. The executive in charge might not call it a scam but others probably would.
- Central bank policies that include ZIRP, the zero interest rate policy, and NIRP, the negative interest rate policy, do not help their economies, pension plans, insurance companies, nor the vast majority of the people. These policies appear to help the political and financial elite. Presidents, prime ministers, and central banks might not call ZIRP and NIRP a scam but others do.
In a world where fantasies and scams are ever-present and increasing, it is reassuring to know that gold and silver have been a store of value for thousands of years. As digital and paper currencies are further devalued during the next decade, gold and silver will substantially increase their purchasing power.
Gary Christenson
The Deviant Investor
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