Education Center
Found your column of August 18th most interesting. What indicators do you look at to conclude, “accumulation in the market started turning to churning and then to distribution”?
Thanks for the interest in the weekend column. It was meant to getpeople thinking and it appears it did. As far as the indicators regardingaccumulation, churning, and then distribution, we don’t have to look anyfurther than the market itself. After the May high, the indexes startedto drift lower, but the entire time, the price and […]
[In Tuesday’s Team Trades we discussed a trade on the QQQ] Were you trying to put on a spread or buying or selling puts? What does 5.60 by 5.80 mean? If the market makers moved bid to hit stops were these people selling puts? I always had to buy at the ask and sell at the bid.
No, that was the bid and ask (5.60 x 5.80, a 20 cent spread). Whathappened was someone apparently put in a limit order to buy the puts at5.80, trying to shave the spread, and the market maker moved the bid up to5.80 while keeping the ask at 5.90. That narrowed the spread and we knewwe […]
What volume(s) determine a block trade? Do they show up on realtime streamers such as Etrade or Scottrade, or do you need a subscription service to see them?
Block trades are trades of 10,000 shares or more. That usually means institutions are doing the buying, but note that they also try to hide their tracks by buying in quantities less than 10,000. We use time and sales to see block trades, but E-trade tracks them as I recall. One place you can look […]
What are the definitions of the analyst ratings? It is very difficult to understand the difference between Strong Buy, Buy, and Accumulate. They all mean that you should add to your portfolio. Yet when a rating is changed from Strong Buy to Accumulate, the stock will usually decline. Recently a firm put out a Sell rating on a stock. Then a couple of weeks later raised it to hold. Now how can you hold something that you do not own? If you had sold the stock on the initial recommendation, would not the proper new rating be accumulate? These recommendations are very confusing, but cause havoc on a stock’s price.
Each brokerage has a different rating system, and even when the words match, the action to be taken can differ. Moreover, you also see ‘focus stocks’ and other ‘stock of the week’ labels. Very confusing. When a stock’s rating is cut by a brokerage, even if it is from say ‘strong buy’ to ‘buy,’ the […]
How do you decide what stocks on the reports to put your money into?
This market is one where you find what sectors are working and stick with them, all the while keeping an eye out for the changing of the guard to the next leader groups. Are builders running into trouble here? Are some of the smaller techs ready to make a nice little move that could put […]
If a stock is not acting right, . . .should you sell before it hits the Stop? Otherwise you can lose $4000 on each trade that goes south to the stop or below the stop. This market is so challenging right now, that you must try to minimize losses.
The market is challenging and the name of the game is to preserve gains and to minimize losses as you pointed out. Indeed, there is no reason to stay in a position until it hits the stop if the play just does not work out. As long as the stock continues the pattern that we […]
As an investor in a company which announces a secondary stock offering, what should I do – sell or hold? Case in point – I hold 150 shares of TARO which announced a secondary stock offering at market close last night. The stock closed at 95, but today quickly dropped to the mid 80s. I know that when a secondary is offered it dilutes the share price of each share, but in the long run is this a negative for the company? TARO was my best performing stock until this happened, and I am unsure now if I should continue to hold or sell my shares.
This is one of the things that companies are doing more of lately, particularly those whose stock price is performing well. It is a way cash hungry companies can get some funds when there is not a lot of investment going on in the economy. It is always a quandary when an otherwise well-behaved stock […]
When you buy a leap, do you buy in the money or out of the money just after the stock splits?? It seems that just after the split the options come back down to normal?
Buying LEAPS is a strategy we do like as we can get more bang for our buck so to speak than buying shares of stock as LEAPS, being options, cost less than the stock. Also, LEAPS are treated about the same as stock, and we can write calls on them to increase our returns. We […]
What is in today’s market the real definition of a ‘long-term’ investment? This is confusing, because ‘long-term’ can be stretched like a rubber band, as far as I can see. It means different time frames for different people. For instance, a stock is starting in a severe downtrend, does one ride it out, no matter how far it would drop, or does one also set a stop loss, get out, then re-enter when it starts back up? Does the sentence “never let profits evaporate” apply to ‘long term’ investments as well?
You are so right. Long-term can mean anything depending upon what broker or investor you are talking to. But in reality, the definition of long-term depends upon the individual investor. Are you in your teens, twenties, fifties, what? Traders consider long term anywhere from a few days to a few weeks. What do we consider […]
What are the signs of accumulation and where (what site & how) can we see it?
The site to see signs of accumulation is right here. We look at the indexes and individual stocks each session and determine if institutions are accumulating stocks or not. There are telltale signs when an institution is buying, or as Jay calls them in our online seminar series, ‘institutional footprints in the sand.’ One of […]
