Every day is a new day and with the market, unlike the sun, you cannot count on it rising, even if the natural predisposition is to do so. Today, it opened lower and, unless it has a change of heart, it will finish lower. I believe the market is now reverting to a disposition that could send it higher today, but I will get to that in a moment. Before then, let me respond to a reader’s question.
- Hi, my older brother and I want to get started in stock trading. We would like to get some instruction that will educate us about the different trading methods available so we can choose the one that fits our psychological makeup. We also want advice on trading platforms – advantages and disadvantages of the more popular ones. Can you help us or direct us to someone reputable that can? We are willing to pay for good advice.
I don’t advise directly about trading platforms and as far as trading methods go, well, there is not enough room in the rest of the year to discuss those in this space. I will, however, suggest you do your search for trading platforms carefully and thoroughly, keeping in mind that in the end, successful trading comes down to you, your abilities, your mindset, and your willingness to do the hard work that is essential to successful trading. I also suggest you pay attention to what I have to say in the rest of this article today. Oh, and my advice is free, good or not.
Just yesterday, I finished writing in this space with the words. “Think technology.” I pointedly suggested investment or trading opportunities exist in this sector. Interestingly, the take on the market slide this morning is the following. BTW, I still think technology has opportunity.
- Stocks opened modestly lower on Friday as weakness in technology shares outweighed gains in other shares spurred by relief a premature pullback of central bank stimulus measures was unlikely.
The reason and I mean the whole reason for this sharp analysis is, of course, the lingering vestiges of the QE nonsense and the report from Blackberry.
- BlackBerry reported a “surprise” quarterly loss Friday, sending its shares plummeting 27% and providing yet another tough lesson for investors: Ignore the Wall Street hype machine.
I write to educate traders and investors, especially beginning traders and investors, so when I read the last sentence above, I whispered the word, “hallelujah.” I have been saying this ad nauseum for years because I firmly believe of all the lessons one can learn in this business, this is the one to learn before all others – Wall St. is full of highly educated people getting paid gobs of money to guess. It is their job to predict, and they are wrong more often than not.
- Just a few months ago, Wall Street analysts were projecting Blackberry would report an adjusted loss of 15 cents a share for the just completed quarter. But a series of anecdotes, “market checks” and other soft data convinced analysts that Blackberry’s new Z10 and Q10 might be selling faster than expected. And so, in March, 25 of the 32 analysts following the stock raised their estimate. In April, 23 estimates were hiked. And in May, we got more of the same as 23 analysts raised estimates. Even in June, the average estimate crept higher on four more hikes.
Now, just to show you what I tell you is true, read the following. You will see the folks who truly do their homework, who work hard to understand reality, have no desire to go with the educated elite who have learned, apart from their educations, to believe that they have an “inside understanding” of the market or a publicly traded company.
- But not everyone was fooled by the hype. Blackberry has also lately drawn numerous short sellers. Those are investors who sell borrowed shares – they aim to repay the borrowing with cheaper shares down the road. The combined total of Blackberry shares sold short in New York and Toronto reached 33% of the company’s market value, Bloomberg reported yesterday. That’s a record high.
Finally, let me just tell you, apart from the peculiarities of a stock such as Blackberry, the market is understandable, even predictable in the broadest context. I find that successful trading is about trends and the trend always begins in the broadest context.
First, understand the global economic picture. Then, get a handle on the US economic fundamentals and temperament. Then, look to a sector that fits the mood and the market fundamentals. Finally, analyze to find an undervalued stock in that sector that will trend up along with the market primarily from good fundamentals. This methodology is simple, straight forward, and it works.
Now, here is some information that pertains to that part of the plan that tells you to understand the global economic picture …
- Concerns about Chinese lenders also continued to subside with the one-week cash rate back at levels seen before the recent credit squeeze that threatened to destabilize the banking sector at a time when the economy is slowing.
- Japan’s consumer prices stopped falling in May and labor demand reached its strongest level in five years. Separate data on the labor market showed the jobs-to-applicants ratio rose to 0.90 in May from 0.89 in April, meaning jobs were available for 9 out of 10 job seekers. This marks the strongest demand for workers in five years.
Trade in the day; Invest in your life …
