It’s one of the biggest and best retailers in the world with a market cap of more than $230 billion and more than 11,400 stores around the globe. These include discount stores, supermarkets, supercenters, warehouse clubs and restaurants, along with retail websites. It’s been around for decades, withstanding… Read More

#-ad_banner-#Like many of my readers, I like to set aside time every week to read the latest issue of my colleague John Kosar’s Market Outlook advisory.  If you don’t read Market Outlook, I highly recommend adding it to your list; the quality analysis from my fellow Chartered Market Technician provides an in-depth look at what’s going on in the major indices, commodities markets and important market news — information all investors should stay on top of. Plus, it comes free with every subscription to my premium advisory, Alpha Trader. In the past few issues, John’s outlook has turned cautious as… Read More

#-ad_banner-#Like many of my readers, I like to set aside time every week to read the latest issue of my colleague John Kosar’s Market Outlook advisory.  If you don’t read Market Outlook, I highly recommend adding it to your list; the quality analysis from my fellow Chartered Market Technician provides an in-depth look at what’s going on in the major indices, commodities markets and important market news — information all investors should stay on top of. Plus, it comes free with every subscription to my premium advisory, Alpha Trader. In the past few issues, John’s outlook has turned cautious as a handful of the important technical indicators he covers start to flash bright yellow warning signals. Concurrently, my Alpha Score system — which ranks stocks from 0 to 200 based on technical and fundamental indicators — has tagged fewer buy recommendations than normal.  So, what’s going on with the market? If you look solely at the major indices, nothing seems amiss — the S&P 500, Nasdaq Composite and Wilshire 5000 are off only modestly from their 52-week highs. But despite the relative calm on the surface, hundreds of stocks are quietly tanking. A classic technical indicator has confirmed my belief… Read More

How to maximize gains while minimizing risk is the quintessential investing query. But while significantly reducing risk is possible (as I’ll show you in a minute), you cannot remove it entirely.  Investors may seek out the “Holy Grail” — a trade with a high return and no risk — but in reality they’re just shifting risk. For example, people who illegally trade on insider information can take huge positions and make an enormous, nearly “guaranteed” reward with seemingly no risk. In reality, the market risk has shifted to a legal one. If caught, the trader faces the potential… Read More

How to maximize gains while minimizing risk is the quintessential investing query. But while significantly reducing risk is possible (as I’ll show you in a minute), you cannot remove it entirely.  Investors may seek out the “Holy Grail” — a trade with a high return and no risk — but in reality they’re just shifting risk. For example, people who illegally trade on insider information can take huge positions and make an enormous, nearly “guaranteed” reward with seemingly no risk. In reality, the market risk has shifted to a legal one. If caught, the trader faces the potential disgorgement of those profits and incarceration. The same is true of fraud such as Ponzi schemes like the Bernie Madoff hedge fund scandal. Risk remains — just in a different form. Law-abiding investors must accept that risk and reward are inseparable. The good news is that maximizing return and minimizing risk is possible using a trend-following system. Or should I say, it is possible when you learn to overcome the emotional difficulties which often stand in the way of profitable trend following. In my 20 years of managing money, I’ve found this is the key to success in the markets. Read More

If you fancy yourself a momentum investor, you’re likely intimately familiar with the concept of relative strength (RS) — arguably one of the most important technical investing tools and one that has withstood the test of time.  At its core, relative strength investing involves buying the best-performing stocks relative to the market and holding them until their momentum changes course. In 1967, Robert Levy published the first scholarly paper on the subject, which was called “Relative Strength as a Criterion for Investment Selection.” The groundbreaking work showed stocks that had outperformed over the past six months… Read More

If you fancy yourself a momentum investor, you’re likely intimately familiar with the concept of relative strength (RS) — arguably one of the most important technical investing tools and one that has withstood the test of time.  At its core, relative strength investing involves buying the best-performing stocks relative to the market and holding them until their momentum changes course. In 1967, Robert Levy published the first scholarly paper on the subject, which was called “Relative Strength as a Criterion for Investment Selection.” The groundbreaking work showed stocks that had outperformed over the past six months tended to do well in the following six months, while stocks that underperformed also tended to continue to do so. Put another way, he showed that strong price trends tend to persist. #-ad_banner-# Even before that, though, the legendary Jesse Livermore — one of the world’s greatest traders from the early 20th century — was following the same concept to make money. According to the classic investment book “Reminiscences of a Stock Operator,” which is based on his life, Livermore believed, “Prices are never too high to begin buying or too low to begin selling.” My own trading system, the… Read More

If you want to start an instant argument, find adherents of technical analysis and adherents of fundamental analysis, and then ask them which investing approach is better. The technical analysts will tell you that a close read of a company’s financial statements won’t help you know if a stock represents a timely investment. The fundamental analysts will counter that simply looking at a series of trading charts only tells you where a stock has been, not where it is going. #-ad_banner-#With all due respect, they are both wrong. The real secret… Read More

If you want to start an instant argument, find adherents of technical analysis and adherents of fundamental analysis, and then ask them which investing approach is better. The technical analysts will tell you that a close read of a company’s financial statements won’t help you know if a stock represents a timely investment. The fundamental analysts will counter that simply looking at a series of trading charts only tells you where a stock has been, not where it is going. #-ad_banner-#With all due respect, they are both wrong. The real secret to successful investing is the marriage of both approaches. In fact, I’ve singled out a pair of factors — one from each camp — that can be used in tandem to deliver robust gains. It’s an approach that has led me to bag triple-digit gains, often in a matter of months, with stocks that represent a range of industries. I want to walk you through this two-pronged approach, what I call the “Alpha Score,” so you can profit from my strategy in your daily trading activities. It’s All Relative The… Read More

These five stocks are widely owned and featured prominently in the media. You have, without a doubt, heard of them, and it’s very possible you even own a few. But I wouldn’t touch any of them with a 10-foot pole. One of the stocks is a struggling retailer that has failed to turn a profit in the past 12 quarters despite the intervention of deep-pocketed hedge fund manager turned corporate raider Edward Lampert. Bottom fishers may be looking to cast a line after the steep 35% decline in the past month, but it’s much too dangerous to own,… Read More

These five stocks are widely owned and featured prominently in the media. You have, without a doubt, heard of them, and it’s very possible you even own a few. But I wouldn’t touch any of them with a 10-foot pole. One of the stocks is a struggling retailer that has failed to turn a profit in the past 12 quarters despite the intervention of deep-pocketed hedge fund manager turned corporate raider Edward Lampert. Bottom fishers may be looking to cast a line after the steep 35% decline in the past month, but it’s much too dangerous to own, even at these depressed levels. I’m also recommending you stay far away from a mega-cap tech company with heavy mutual fund ownership that collectively lost those funds billions since missing earnings estimates earlier this month. Plus, a well-known package delivery service, retailer and Internet content company that all have precarious charts.  #-ad_banner-# Although these companies are very different, they have two things in common. First, each of these stocks has low relative strength (RS). Relative strength compares the price performance of a stock against every other stock in the market over the past six months. A stock’s RS… Read More

European stock markets have come under heavy pressure over the slow-motion train wreck of Greece’s potential default. All of the major European indices have dropped below their 50-day moving averages. The markets in France, Spain, Austria and Germany became so weak that they touched long-term support of their 200-day moving averages. This pressure from across the pond weighed on U.S. markets with the S&P 500 briefly slipping below its 50-day moving average twice in the past two weeks. Yet while things here at home looked wobbly, they didn’t break down. On Thursday, the S&P 500 saw a bullish… Read More

European stock markets have come under heavy pressure over the slow-motion train wreck of Greece’s potential default. All of the major European indices have dropped below their 50-day moving averages. The markets in France, Spain, Austria and Germany became so weak that they touched long-term support of their 200-day moving averages. This pressure from across the pond weighed on U.S. markets with the S&P 500 briefly slipping below its 50-day moving average twice in the past two weeks. Yet while things here at home looked wobbly, they didn’t break down. On Thursday, the S&P 500 saw a bullish break above a resistance line on heavy volume. On the chart I’ve also marked an important support level going back to April that has stopped four declines. On the same day, the Nasdaq followed suit with an even sharper rally to a new high on heavy volume in what is known as a “follow-through day.” Coined by William O’Neill of Investor’s Business Daily, it is a sign of a new intermediate-term uptrend.  #-ad_banner-# While not every follow-though day has led to a sustained rally — no indicator is perfect — no rally of significance has… Read More

As Chief Investment Strategist of Profitable Trading’s Alpha Trader service, I’ve noticed a clear trend emerging over the past few weeks. When I ran my algorithms to screen the market for our next big winners, two things leapt out at me — and both are bullish signs.  First, the number of stocks I’ve been recommending to subscribers is running at twice its “normal” rate.  #-ad_banner-# Second, which I’m going to discuss today, my watch list of potential future entries has exploded. In fact, this is the largest my list has been… Read More

As Chief Investment Strategist of Profitable Trading’s Alpha Trader service, I’ve noticed a clear trend emerging over the past few weeks. When I ran my algorithms to screen the market for our next big winners, two things leapt out at me — and both are bullish signs.  First, the number of stocks I’ve been recommending to subscribers is running at twice its “normal” rate.  #-ad_banner-# Second, which I’m going to discuss today, my watch list of potential future entries has exploded. In fact, this is the largest my list has been in the past six months. My watch list is a group of stocks that meet Alpha Trader‘s stringent initial qualifications and are nearing — but not quite at — a buy recommendation.  All stocks considered for Alpha Trader must have an Alpha Score of 140 or more out of a possible 200. You may have heard us discuss the Alpha Score before, which is based on two proven indicators — one technical and one fundamental.  Both of these critical factors have a plethora of studies supporting their success in helping select winning investments. The technical component… Read More

I want to share a little-known but powerful indicator with you today. To paraphrase hockey legend Wayne Gretzky, this indicator helps us skate to where the puck is going to be, not where it has been. In other words, we can use it to identify and anticipate strength and weakness in markets and specific sectors. This indicator is a graphical illustration of relative strength (RS). Regular readers know RS is a quantitative measure of trend strength and one of the most powerful tools available to traders. Study after study shows that outperforming stocks tend to continue to outperform, and we… Read More

I want to share a little-known but powerful indicator with you today. To paraphrase hockey legend Wayne Gretzky, this indicator helps us skate to where the puck is going to be, not where it has been. In other words, we can use it to identify and anticipate strength and weakness in markets and specific sectors. This indicator is a graphical illustration of relative strength (RS). Regular readers know RS is a quantitative measure of trend strength and one of the most powerful tools available to traders. Study after study shows that outperforming stocks tend to continue to outperform, and we have used high RS to find stocks that returned up to 242% in a year. Typically, most people compare performance between financial instruments by measuring percentage changes. The following graph shows the performance of a few of the major U.S. equity indices over the past 10 weeks: Here you can see the tech-heavy Nasdaq is leading the fray with the broad-market NYSE Composite a close second. The natural resource-heavy AMEX is in third, and the blue-chip Dow industrials and small-cap Russell 2000 are bringing up the rear. That’s all the information you can really… Read More

Last week, I was surprised when my system designed to spot stocks on the verge of a breakout gave a buy signal for a stock in one of the most hated sectors of the market. It’s been a very long time since this dormant sector produced a buy candidate, but its boom-and-bust nature can produce huge winners. Subscribers to my premium Alpha Trader service rode one stock in this group to a 135% gain last year, making it our second largest winner. We are seeing green… Read More

Last week, I was surprised when my system designed to spot stocks on the verge of a breakout gave a buy signal for a stock in one of the most hated sectors of the market. It’s been a very long time since this dormant sector produced a buy candidate, but its boom-and-bust nature can produce huge winners. Subscribers to my premium Alpha Trader service rode one stock in this group to a 135% gain last year, making it our second largest winner. We are seeing green shoots sprout in the commodity-driven natural resource sector, and this could be the start of a long and persistent run in some very beaten-down stocks. Commodities are reflecting the nascent but aggressive pickup in inflation. The chained consumer price index (CPI) for all urban consumers showed a 1.2% rate of inflation from its January low, which annualizes to a 7.2% rate. This metric is considered to be a good representation of the general public because it accounts for nearly 90% of the population. Read More