One of the best things about quantitative indicators is that they do not discriminate. Unlike investors, they cannot be swayed by emotions. They do not care if a stock is loved or hated, big or small, well-known or obscure. All that matters is cold, hard facts, and that is something I can get behind. #-ad_banner-#Now, that’s not to say all indicators work well. To the contrary, many are garbage. But when you find one that works, it’s like striking gold. When Profitable Trading developed a new indicator based on momentum two years ago, we spent hundreds of hours backtesting it. Read More

One of the best things about quantitative indicators is that they do not discriminate. Unlike investors, they cannot be swayed by emotions. They do not care if a stock is loved or hated, big or small, well-known or obscure. All that matters is cold, hard facts, and that is something I can get behind. #-ad_banner-#Now, that’s not to say all indicators work well. To the contrary, many are garbage. But when you find one that works, it’s like striking gold. When Profitable Trading developed a new indicator based on momentum two years ago, we spent hundreds of hours backtesting it. And it quickly became the most successful indicator in our company’s history. This unique indicator is designed to find stocks right before they soar. And that’s exactly what it does. In the past few years, it’s tagged over 100 stocks right before they broke out to the upside. In 2015, we closed out winners of up to 88%. In fact, for two years in a row, this indicator spotted several of the best-performing stocks of the year, ones that went on to gain as much as 242%. At the beginning of each year, we compile a list of the top… Read More

Like position sizing, “sell” rules are one of the most underrated, ignored and overlooked areas of investing. You can find nearly anyone giving their opinion on whether to buy this stock or that stock. But when it comes to actually selling a position, you’ll often hear nothing but… Read More

It’s almost time to close the books on 2015, and I have no doubt many investors are frustrated. The market has suffered sickening bouts of volatility with very little to show for it — the S&P 500 is up just 1.5% year to date. Of course, there are stocks that have bucked the trend, and today I want to show you how a little-known indicator pegged two of 2015’s best-performing stocks. It’s called the Alpha Score, and it combines two of the most powerful drivers of big uptrends. One is technical in nature, and numerous studies have proven… Read More

It’s almost time to close the books on 2015, and I have no doubt many investors are frustrated. The market has suffered sickening bouts of volatility with very little to show for it — the S&P 500 is up just 1.5% year to date. Of course, there are stocks that have bucked the trend, and today I want to show you how a little-known indicator pegged two of 2015’s best-performing stocks. It’s called the Alpha Score, and it combines two of the most powerful drivers of big uptrends. One is technical in nature, and numerous studies have proven stocks with this critical component tend to outperform. The second factor is a fundamental metric that investing greats such as Warren Buffett and Charlie Munger swear by.  Part of the beauty of the Alpha Score is that it takes the emotion out of investing, issuing clear buy and sell signals. And it is not only great at finding little-known companies set to soar, but also at timing entry points in well-known names that are about to make a big run. #-ad_banner-# To see what I mean, let’s take a look at two of our biggest winners this year. Each delivered… Read More

If you want to start an argument, find adherents of technical analysis and adherents of fundamental analysis and ask them which investing approach is better. The technical analysts will tell you a close read of a company’s financial statements won’t help you know whether a stock represents a timely investment. The fundamental analysts will counter that looking at charts only tells you where a stock has been, not where it is going. 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… Read More

If you want to start an argument, find adherents of technical analysis and adherents of fundamental analysis and ask them which investing approach is better. The technical analysts will tell you a close read of a company’s financial statements won’t help you know whether a stock represents a timely investment. The fundamental analysts will counter that looking at charts only tells you where a stock has been, not where it is going. 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, from stocks across all industries. #-ad_banner-# I want to walk you through this two-pronged approach so you can profit from my strategy in your daily trading activities. It’s All Relative  The term relative strength is simple and transparent. It’s a measure of how a stock or sector is trading relative to the broader market. When the market is flat or rising, any… Read More

As the market continues to carve out what looks to be a bottom, I’d like to show you the power of my trend-following system, because it’s during times like these that the next stock market leaders build their launch pads for huge uptrends.  The Alpha Trader system is based on an indicator known as the Alpha Score. When pressure comes off the market, stocks showing high Alpha Scores are likely to be the first to take off. And we want to be ready to act immediately when the system signals a buy. What makes the Alpha Score so special? Simply… Read More

As the market continues to carve out what looks to be a bottom, I’d like to show you the power of my trend-following system, because it’s during times like these that the next stock market leaders build their launch pads for huge uptrends.  The Alpha Trader system is based on an indicator known as the Alpha Score. When pressure comes off the market, stocks showing high Alpha Scores are likely to be the first to take off. And we want to be ready to act immediately when the system signals a buy. What makes the Alpha Score so special? Simply put, it pinpoints winning stocks.  The Alpha Score is a proprietary measure of fundamental and technical strength. I use it to rank all U.S. stocks based on two key drivers of big price trends. These two factors have shown up time and again at the beginning of huge price moves.  Today, I want to show you the Alpha Trader system in action with a position we closed earlier this year in Southwest Airlines (NYSE: LUV) for a 54% gain. LUV is far from our biggest winner. The Alpha Score has given buy signals for stocks that went on to gain… Read More

Emotion is the bane of traders. It causes us to act rashly instead of rationally, and typically at times when it’s most costly.  It has been shown that investors are most bullish at or near tops and most bearish at or near capitulation bottoms. Just look at the mania right before the dot-com bubble burst or the despair during early 2009 following the credit crisis meltdown. In both instances, the trend was turning as emotions peaked. There’s only one way I know of to remove emotions from investing: following a rules-based system built on a measurable, repeatable process.  And the… Read More

Emotion is the bane of traders. It causes us to act rashly instead of rationally, and typically at times when it’s most costly.  It has been shown that investors are most bullish at or near tops and most bearish at or near capitulation bottoms. Just look at the mania right before the dot-com bubble burst or the despair during early 2009 following the credit crisis meltdown. In both instances, the trend was turning as emotions peaked. There’s only one way I know of to remove emotions from investing: following a rules-based system built on a measurable, repeatable process.  And the system I follow in my premium newsletter, Alpha Trader, has worked very well for me and my readers.  We’ve detailed numerous times how our proprietary indicator, the Alpha Score, goes about selecting stocks poised to make huge runs based on a relative strength (RS) score above 70 and a fundamental trigger. (For more on how the Alpha Score works, you can read this article.)  But today, I want to talk about how our rules-based system helps ensure success once we are in a position. At that point, there are two critical components: … Read More

Last month was the worst August for the venerable Dow Jones Industrial Average in more than 16 years. For the S&P 500, it was the worst August since 2001.The volatility since has been almost sickening, but I believe the most intense portion of the selling is behind us. The AIM sentiment indicator, which I discussed last week, has plunged even further into bearish territory. In fact, it’s dropped so far it’s more bearish now than it was during the 2008 financial crash.  As I explained then, market sentiment is a classic contrarian indicator that can help spot changes… Read More

Last month was the worst August for the venerable Dow Jones Industrial Average in more than 16 years. For the S&P 500, it was the worst August since 2001.The volatility since has been almost sickening, but I believe the most intense portion of the selling is behind us. The AIM sentiment indicator, which I discussed last week, has plunged even further into bearish territory. In fact, it’s dropped so far it’s more bearish now than it was during the 2008 financial crash.  As I explained then, market sentiment is a classic contrarian indicator that can help spot changes in financial trends. When too many people are thinking one way, the market is primed to move in the opposite direction. From a sentiment perspective, this market downturn is a giant vise squeezing out all the bears. #-ad_banner-# When it’s over, I expect the ensuing bottom to provide solid profit opportunities in stocks with high Alpha Scores (more on this later). And from what I’m seeing, those outperforming stocks are likely to be based in the United States. Relative to the rest of the world, U.S. stocks are doing the “least poorly.” You can see this clearly in the Relative… Read More

There is an old trading adage I’ve always liked: “The market will scare investors out or wear investors out.” Prior to Aug. 20, we were in a wear-you-out stage. The Dow was trading in the narrowest range in more than 100 years of just 7.7% from top to bottom. #-ad_banner-# To make things worse, the S&P 500 had crossed its 50-day moving average a total of 35 times, exceeding the number of crosses ever seen in a full calendar year in the first eight months alone. And the vacillating, whipsaw nature of the sideways trend aggravated investors. Just prior to… Read More

There is an old trading adage I’ve always liked: “The market will scare investors out or wear investors out.” Prior to Aug. 20, we were in a wear-you-out stage. The Dow was trading in the narrowest range in more than 100 years of just 7.7% from top to bottom. #-ad_banner-# To make things worse, the S&P 500 had crossed its 50-day moving average a total of 35 times, exceeding the number of crosses ever seen in a full calendar year in the first eight months alone. And the vacillating, whipsaw nature of the sideways trend aggravated investors. Just prior to the violent sell-off, I wrote about how the massive pickup in new lows indicated a stealth correction occurring in stocks. At the time, about 60% of S&P 500 stocks were down at least 10% for the year — i.e., in official correction territory — yet the index was basically flat.  Then, on Aug. 20, the market entered a scare-you-out stage. Traders embarked on a selling spree sparked by global growth fears that brought the index into full-blown correction territory in just four days. The chart below shows the gargantuan spike in stocks making new 52-week lows as traders… 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

Look solely at the major indices, nothing seems amiss. The S&P 500, Nasdaq Composite and Wilshire 5000 Total Market Index are off only 2% to 3% from their 52-week highs. But despite the relative calm on the surface, hundreds of stocks are quietly tanking. A classic technical indicator… Read More