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Frequently Asked Questions

How do you see the next earnings season playing out?

Jun 22, 2017

There’s no question that earnings over the last few quarters have been impressive. I’ve gone into recent reporting cycles far more bullish than the analysts, and often even my bullish growth predictions were exceeded. The next quarter should be more of the same as corporations are in the sweet spot right now with low interest rates, modest inflation and a strong labor market. I believe we’ll see more companies beat estimates on both the top and bottom lines in Q2, setting us up for another successful earnings season. Continue Reading…

I have been hearing a lot about Bitcoin. Is it time to buy?

Jun 20, 2017

This question made me chuckle because I’ve heard it from multiple people recently! When the woman who cuts my hair, the man next to me on the plane and a relative all ask me about a specific investment, it raises some red flags. That may sound like the opposite of what you might expect, but the overexposure Bitcoin seems to have right now makes me wary in the short term. I do believe that cryptocurrencies are real and that they have a place in the future, but Bitcoin in particular needs to come back down to earth before it becomes an attractive buy. Continue Reading…

Since the market can get choppier in the summer, would you consider using hard stop-losses to protect us on the downside?

Jun 18, 2017

The market historically does get more volatile in the summer due to lower trading volume, but it doesn’t necessarily mean we need to change our risk management strategy. I will rarely place a hard stop with a broker on a longer-term holding stock because weathering the swings is part of investing. Plus, I'd prefer to watch my holdings on a daily basis. A hard stop-loss can often cause you to sell out of a position at a low point and miss out on a near-term rebound. Instead, I utilize critical support levels (key levels on a chart, such as moving averages or previous areas of price support) to monitor the action and determine if a change needs made.

That’s not to say I don't ever use hard stops. In fact, they can sometimes be helpful in protecting gains.

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What are your thoughts on Square (SQ)?

Jun 15, 2017

Of the two widely-regarded tech companies that Jack Dorsey has helped create – Square (SQ) and Twitter (TWTR) – I’d put my money on the former. The mobile payments company is a standout in one of my favorite NexGen trends, and this week Apple (AAPL) announced plans to take on SQ and its peers in the mobile payment game. I have to believe Apple will eventually be successful, but I also believe there will be multiple winners with SQ being one of them. However, I wouldn’t be a buyer just yet. The stock is up a lot recently, so I’d recommend waiting for a pullback before establishing a position. Continue Reading…

What are your thoughts on next-gen cryptocurrency? Any way to trade it?

Jun 13, 2017

This is a question I have received many times in the last month – including three in the last week! – as the price of Bitcoin has skyrocketed. There are a few ways to play the movements in Bitcoin, but none of them are perfect and are simply “tracking” types of securities that have issues of their own. The pure-play way to trade it is buying the coins themselves, but I readily admit I’m not an expert in how that works. I do believe that cryptocurrencies are real and that they have a place in the future, so I’ll continue to watch for NexGen opportunities to profit from them. For now, the overexposure Bitcoin has made me wary in the near term and it needs to come back down to earth before it becomes an attractive buy. Continue Reading…

Volume inevitably gets lighter in the summer, how does this impact your trading strategy?

Jun 11, 2017

You’re absolutely right that volume historically slows down during the summer months as Wall Street heads out on vacation, but it doesn’t change my trading strategy. What does change is the daily volatility in individual stocks because the lighter overall volume allows for a larger trading range. That creates chances for us to buy into patches of weakness and sell into rallies that may only last a few hours. Just look at last year – had you taken a three-month vacation from investing, you would have missed out on two great buying opportunities. That’s why I love the summer months for trading and am excited about what’s ahead for us! Continue Reading…

How do you identify these next-gen trends?

Jun 07, 2017

I get asked that question quite a bit, and it’s a good one. People are often surprised that Wall Street is missing out on a lot of these opportunities, as they should be.

There are a variety of ways I spot the strongest trends, from stock screens to money flow to charts to research reports and more. But it may surprise you to learn that a lot of really good investment ideas also come to me in my everyday life. I’m always alert, always watching what’s going on around me. Oftentimes, it’s these very themes. This is how the smaller yet powerful trends that Wall Street is missing out on make it onto my radar.

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I’ve noticed that you talk about the RSI a lot in your analysis. What exactly does it show?

Jun 02, 2017

You’re absolutely right. The relative strength index – more commonly referred to as the RSI – is one of my favorite indicators on a stock chart. It’s an overbought/oversold oscillator that measures a stock or index against itself.

Don’t confuse it with relative strength, which is very different as it measures one chart against another to determine the stronger. The RSI is a formula that helps determine if a stock has run too much to the upside or fallen too far to the downside. There are a few different time settings you can use with RSI. My preference is the 9-day period setting, which takes the last nine trading days into consideration to determine the RSI number. While I could talk for hours on how I use the RSI in my research, it really excels in identifying buy signals.

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Are moving averages something you look at in your stock analysis?

May 31, 2017

Yes! I love moving averages because they can tell us a lot about historical trading and give us a good idea of where the stock is (or at least should be) headed in both the near and long term. The 50-day moving average is one of the most widely-used indicators in the world of technical analysis, and yet many investors aren’t familiar with how it works or its importance in trading.

A simple moving average – the type that I use in my analysis – is the average closing price over a certain number of previous trading days. So the 50-day adds up a stock’s closing prices over the last 50 days and divides by 50. The end result is the level of the moving average on any given day. There are a few ways I use this data in my analysis.

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I recently read a statistic that 50% of stocks were sitting below their 50-day moving averages. So what?

May 28, 2017

You’re definitely not along in wondering that, so let’s talk about it. The more names trading above the 50-day indicator is a sign of a healthy market, since more stocks are higher than their average price. However, if the number gets too high it could be considered a sign of an overextended market. Similarly, if the number below the moving average is abnormally low, it can be a sign of a potential bottom.

The 50/50 split you mentioned tells me two things. The first is that the market is nowhere near a top because the number of stocks would be closer to the 80% level we saw at last year’s peak if it were. The second is that with half of the stocks considered healthy and half considered unhealthy, we are truly in a stock picker’s market.

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