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Tuesday, July 26, 2005
Market Recap
Technology and small cap stocks, NASDAQ and RUT, continue to outpace the rest of the market on a percentage basis. Today, the NASDAQ gained 12 points and the RUT gained 4, while the S&P gained 2 points and the DOW lost 12 points. Biotech's were very strong today and continue to be one of the strong leaders in this market. More good earnings are being reported tonight, this time it was AMZN and they beat the street by 2 cents after the bell and it was trading up in after hours.
The Puzzle, Can it be Solved?
Can anyone solve this earnings puzzle? If you have been watching earnings, you know that holding stocks through earnings is nothing more than a gamble. It is just amazing to me how some stocks act after beating the estimates or, even more puzzling, when they miss earnings. Lately, it has been impossible to guess which way a stock will go after it reports its earnings. For example, X missed their number today by 20 cents and yet the stock was up $2.00 today. CME missed their number by .2 and the stock closed up $6.00. Yet we have seen some stocks beat their estimates handedly and get clobbered. It just does not make sense at all. You beat the number, your stock should go up, you miss and your stock should go down, but that does not always happen, that would be too simple. Sometimes they “sell the good news” or “buy the bad news”, another example of how the market does not act logically. But, you cannot bank on playing the market with this contrarian view because sometimes, when a company beats the street, the stock will go up like it should, as EBAY did last week and when they miss; stocks go down as YHOO did last week. You just cannot tell what the reaction will be so it is just best to not hold through earnings at all. This is why we have not taken many positions ahead of the earnings.
The Gold Mine
There is a gold mine in this country and it is available to anyone who wants to go in and help themselves to it. This gold mine is located in Manhattan NY. The gold mine I speak of is on Wall Street and it is called the U.S. Stock Market. It opens its doors every day and invites us all in and we can leave each day with as much cash as we want to take from it, if we can. That is it; we can literally go inside the stock market everyday and walk away with a fortune, if we want to. So why don't we? It sounds so easy to do and “they”, the stock market, are so willing to let us do it, and yet some cannot consistently do it each day. It is much easier said than done. Looking at the above paragraph on earnings reminds us that trading stocks is probably the hardest way to make a living and probably one of most stressful. It takes time, patience and persistence. With hard work, anyone can do it.
The “Big” Money
A doctor goes to school for 8 years before he can treat patients and make the “big” money. A lawyer goes to school for 8 years before he can defend O. J. Simpson, an alleged murderer, and make the “big” money. A professional baseball player has played baseball all his life and practiced many years before he gets to the big show and makes the “big” money. Why do so many people think that they can just walk into the stock market and make the “big” money without first paying their dues and learning the profession?
Just like the casino's in Vegas, sometimes the odds are stacked against those naive investor's that choose to be in the stock market without learning first. Somebody who has never been to a casino before will probably lose their money, as does the new investor or trader. A professional gambler makes money because he has taken to time to learn the business. He can beat the casino at will and the professionals on Wall Street can do the same, they beat the market at will. It took many years for the professional gambler and the professional stock trader to get to the point where they can beat their opponents at will.
A doctor, lawyer or baseball player may be good at what they do and have money to invest but it does not mean that they will be successful in the market. The best thing about the stock market is, when you do finally get good enough to make a living, you know you will be a trader for the rest of your life. The other professions that I mentioned do not carry with them this security. A doctor can be sued for malpractice even if they did nothing wrong. A professional athlete gets too old to perform; the professional gambler gets kicked out of the casino and banned for life, if he gets too good. You are never too old to trade stocks, you will never be sued for winning a trade, and no trader has ever gotten kicked out of the stock market for being too good.
STHQ Chart Index
If you go to the chart index in the left side menu, you can review and study charts that we have annotated for each stock listed in the past.
For New Members
For all of the new members with us, please make sure to read the link “How to use Bulletin” at the bottom of the Bulletin page on the website. It is critical that you know how to use this trading tool before trying to trade the stocks mentioned. The effectiveness of your trades will diminish if you do not completely understand how the information is presented.
Earnings Calendar
We have added the earnings link for each stock on the bulletin. To access the link for earnings, you can either use the link below or click the link on the bulletin for the corresponding ticker. Click the online bulletin in the left side menu for access to the earning calendar for each stock listed. It is not recommended to hold a position through earnings. You can always buy the stock back after the dust settles.
http://www.earnings.com
Stockcharts Listing
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