High Balling
“Buy low, sell high” is an axiom that is old as the market itself,
yet is misleading to a great number of new and novice traders, because to do
this forces you to call a bottom when the market could continue to move against
you. The majority of successful traders do not subscribe to this old saw, and
instead choose to buy high and sell higher. Why this goes against what may feel
natural (we all like to find a bargain right?), to do what feels right is not
always good. Stocks that are beaten down can stay at low levels for an
indefinite period of time. Why put your hard-earned money into a stock that
might look attractive because it is cheap, just to watch it languish near the
area of its 52-week low, or worse, fall even farther?
Keeping this in mind, you can use the java applet’s search feature to look
for stocks that have hit 52-week highs and lows, and two-month highs and lows,
giving you a list of stocks that are showing momentum at the current time. You
can add these stocks to your watchlist, and then look at the weekly and daily
charts to get swing and short-term setups for potential trading candidates.
Looking for possible setups for the TradersWire, I
found a few good-looking setups using the above criteria. Calpine
(
CPN |
Quote |
Chart |
News |
PowerRating) is
pulling back from its recent high. Since nearly all strong stocks take a
breather before exploding again, CPN could make another run to new highs out of
the pattern.
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Loews Corp.
(
LTW |
Quote |
Chart |
News |
PowerRating) is higher again today following a
momentum gap after surging upward more than 7 points off the 50-day moving
average.
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Finally, SouthTrust
(
SOTR |
Quote |
Chart |
News |
PowerRating) is closing in on a Cooper
Rule of Four Breakout, where a stock trades over triple tops.
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Over the next few days, I will use one or two alerts from our
tool box and show you how each can be utilized in your trading. This will give
you a good look at what you may have been missing if you are unfamiliar with how
to use our service or have never taken advantage of it because you had no idea
of the potential it provided you.
Until tomorrow,
Duke