News Details – Smallcapnetwork
The Real Secret to Stock-Picking Isn't a Secret. It's Just...
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February 2, 2024

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PDT

Hello folks, and welcome to the Tuesday edition of the SmallCap Network newsletter. Let's just dive in start with what I think is (still) the most pressing issue facing stocks.... and it's not the Brexit debate. I don't know if you know it or not, but you're seeing a paradigm shift unfurl before your very eyes. It's not a ground-shaking, jaw-dropping event, which is why I suspect most traders don't even realize it's happening. But, it's there, if you choose to look at it. What I'm talking about is the continuing demise of the U.S. dollar, and the corresponding demise of U.S. interest rates in sync with the greenback's weakness. Those of you who keep close tabs on the daily market will know neither of those ideas sound quite right. The U.S. Dollar Index was up about 0.4% on Tuesday, and interest rates edged higher too... for a third day in row. That's not quite what I'm talking about though. I'm saying today's and this week's bullishness form the dollar and yields, respectively, are the exception to the bigger trend rather than part of it. I think we mentioned last week (though maybe it was to one of the premium subscribers) how yields were due for a bounce and bonds were due for a pullback, but those would just be short- term moves. In both cases, the technical trend is pointed the other way. Well, that's all this is. Take a look. On this chart you can also see though the U.S. Dollar Index was up today, the bigger trend remains pointed downward. Moreover, on this chart we've found something else quite telling about the U.S. Dollar Index - there's a huge technical floor at 93.40. This is kind of new, marking today's and Monday's low, as well as back-to-back lows from a couple of weeks ago. While it's not the ultimate make-or-break point, it's one I'm going to be watching closely the rest of this week. If it fails to hold up as a floor that's apt to be bad all around in the near-term, though it's actually good news for a lot of corporations in the long run. Speaking of charts, here's a close up of the S&P 500's after today's closing bell rang. Anyway, that's not the focal point of what I wanted to talk with you about today. I think we may have made this point before, but it's an important idea worth making over and over again. Besides, today's edition of Black Ops Trader served it up quite nicely, so I'm going to take that ball and run with it. Beginning with the grand finale first, your very biggest winning trades are going to be technically as well as fundamentally sound. You really need to look for both when you're on the hunt for new trading ideas. That premise runs the risk of irritating not one but two different camps of people. Fundamentally-driven investors scoff at charts, since a chart's history doesn't predict future corporate results. [It's a flawed logic, in that past earnings and sales also don't necessarily predict future corporate results, but that's another discussion.] And, chartists will be quick to point out that by the time you have enough fundamental reasons to buy a stock, most of the stock's upside is in the past. The truth is somewhere in the middle. And let me be specific -- successful investing is somewhere in the middle. Why? It's simple really. Good fundamentals tell you which companies to own. Charts tell you when it's the optimal time to buy or sell those stocks. Since I'm ruffling feathers, care to have a few more ruffled? In my experience, people who don't do well trying to make decisions based on fundamentals also don't do well using technical analysis, and vice versa. In the same vein, people who are successful fundamental analysts also often end up being good technicians, and vice versa. The reason is, anyone skilled in either already understands that tools are not crystal balls. They're just processes that help you weigh the odds. From that perspective, the "trick" becomes clear.... this business is all about risk-management. That's it. If you can assess your risk and define your reward -- and I mean really define it with at least some semblance of accuracy -- you've got the mindset you need to be great at this game. By adding a technical or fundamental weapon to your existing arsenal, you get even better at managing risk and weighing the odds.... which is why the Black Ops Trader newsletter is so incredibly potent. I can't tell you what today's pick from the BOT was, but I can show you the chart. It won't take any time at all to recognize this stock has formed a serious recovery shape. Burn this pattern into your memory, as you'll see it time and time again right in front of many big-time runups. With just a quick glance it looks choppy. The longer you look at it though, the clearer it becomes... the bulls are playing tug-of-war with the bears, and slowly taking charge. Thanks to this week's pop above a major technical ceiling, the tide has turned. Here's the really wild part - the past and projected revenue and earnings trend. Choppy? Sure, but that's because it's a cyclical business. Look at the bigger trend. Revenue is rising. Earnings are rising. The passage of more time will allow those trends to continue. And just for the record, the history here has been one of raised revenue and earnings outlooks. All of a sudden the stock's chart makes a lot of sense. Over the course of 2015 the market had to accept the fact that this company wasn't in the trouble most thought it was in. It's actually doing quite well. This idea isn't fully priced into the stock's value though... not even close. It sure looks like it's getting that way, however. If this all sounds like it's the approach your portfolio needs to start utilizing (and for most market participants, it is), this is the kind of analysis and stock picking the Black Ops Trader is dishing out every day. It's nice to see those guys using such a holistic approach. Here's how you can get it for yourself. Think about it like this .... one great trade could more than cover the cost of your subscription.