Two Stock Analysis Tricks That You Must Know

When I first started trading full-time back in 2000, I had no idea what I was doing.

I knew stocks. I knew investing. I knew (a little) about how to play the market.

But trading was still the wild west in those days.

No one really knew what they were doing. The online brokerages were still pretty new (eTrade was one of the first, back in 1991, but that wasn’t really old by 2000) and the very idea of sitting home in front of your computer and trading was… let’s say untested.

Of course things have changed. It’s 2019 and trading went mainstream many years ago. Today traders can, from the comfort of their homes, participate in markets all over the world, making lightning fast moves and executing strategies that used to be reserved for only the most inside of trading insiders.

In fact, that’s one reason why we’re now able to offer something like our 14 Day Breakout Code. It’s all about speed and taking advantage of the predictable moves in the market in less than 14 days to get ahead of the next big trade.

Because that’s the big riddle in finance — How do you spot an explosive stock before the big move? How do you capture breakouts in a bottle?

I know how. And I have a strategy to help you get in before the big moves.

And these aren’t small gains, either. I’m talking about repeatable profits like 176%…typically in 60 days or less, and always on blue chip stocks!

Typically when thinking of Blue Chip stocks, we think of small movements and boring stocks… but that thought process is the exact opposite of what we present in the 14 Day Breakout Code.

Every month, we scan the market for stocks exhibiting our special 3 digit code. When we find an opportunity that exactly matches our criteria… We pounce. Then we use our dynamic profit system to extract maximum cash from the trade, while minimizing our risk.

Want to learn this 3 digit code for free? If you are, learn the code now before reading the rest of this article.

Learning the code is one option, but what if you want to try your hand at trading the lightning-fast stock market yourself without our help?

I have something for that too.

Because over the years I’ve developed a bunch of different stock analysis tools for different market conditions. These are simple techniques to help me trade profitably no matter what the market is doing.

And here are my top two…

1: RELATIVE STRENGTH ANALYSIS

Relative strength is not an indicator, but a comparison between two stocks that are in the same industry group. When one stock is trending strongly, you compare the trend to other stocks in the same industry group and see how strong their trend compares to the other stocks in the same industry group.

Typically, you will find one particular stock that outperforms all other stocks in the industry and leads the sector. If it’s leading, then you jump on board.

The relative strength comparison works especially well with ETFs, because they represent a wider range of stocks than one individual company.

Start with Barchart.com or Yahoo Finance as your source for these numbers. The more specific you can breakdown the sectors and the stocks or ETFs that make up the sectors, the easier it will be to choose those that have the highest correlation to the others. You want to find markets that are closely related so that you can truly see which one is stronger or weaker.

Relative strength works best when markets are trending, similarly to how the stock market is behaving at this time.

2: THE 52-WEEK HIGHS AND LOWS

Another very important tool that many stock traders ignore is the 52-week high / low number.

It’s probably because this figure is about as easy as it gets. It’s just a simple measure of stocks that are making one-year price highs and lows. This analysis tool doesn’t promise much and doesn’t look as cool as some advanced indicators.

So it gets overlooked.

Which is a mistake.

I can assure you, more professional traders analyze the 52-week high / low number than any other technical indicator. When markets are range bound and lack any significant trend, the 52 week high / low number won’t be of much use. But when markets begin trending, the numbers begin shifting very quickly one way or another.

Once a trend begins, the ratio will show a strong bias in one direction, which will get stronger and stronger as the trend continues. By monitoring this indicator on a daily basis you will start developing a feel for the momentum that’s moving the market and will start noticing patterns when trends are beginning or coming to an end.

And you can find it for any stock by doing a simple Google search.

The truth is, most technical indicators are filters, and they distort what’s actually happening. Using relative strength to determine sector strength and individual stock strength can provide valuable clues to future performance. Similarly, the 52-week high / low ratio is one of the best ways to analyze cumulative market strength and weakness as well as individual sectors and stocks.

Once you start monitoring these for a few months, you’ll start developing a feel for the market’s ups and downs… and that’s when the real fun begins.

So where do you go from here? You either try these two techniques on your own, or let us help you.

I want you to do both. Take what you’ve learned here and apply it to your everyday trading life, but I also need you to take a look at what we’ve prepared for you. Our 14 Day Breakout Code strategy not only uses these two techniques, but hundreds more.

This code has been developed by traders who have traded for the last 3 decades. They’ve seen their share of bull markets, but also have lived through many bear markets… and those are the markets that only the great traders succeed in.

If you’re excited about what you’ve learned but still would love more information to help you be a successful trader, learn our 14 Day Breakout Code today. By the way, it’s free to attend!

Attend the briefing on our special code now.

One more thing, there are many times I see beginning traders believe that complex strategies equate to profitable strategies, but that’s just not how it works. In reality, the more complex the strategy, the more difficult it is to interpret, execute, and manage. That’s why this simple trading strategy is so popular with professional traders…

 

Rob Booker

BookerWealth 

This article is supplied courtesy of Rob Booker.

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