Start the conversation
Leave a Reply
Each and every week I bring to you tech winners with great fundamentals.
However, perusing balance sheets and income statements isn't the only way to find great tech stocks to buy.
There's also the technique known as technical analysis.
In technical analysis, we study a stock's chart to figure out if it's about to soar, ready to plummet, or just treading water. And in my 30 years knocking around Silicon Valley, I've found that the stocks with the best charts tend to be small caps.
But not all stocks with eye-popping charts are risky small caps.
In fact, my charts have revealed two big-cap tech stocks with small-cap charts.
And today, I'm not only going to share these profit generators with you – I'm also going to give you a little DIY power by showing you how to decipher stock charts yourself…
Off the Charts
There's a reason why popular small caps can have such great charts – at least for a time. It's all about supply and demand.
Small caps, by definition, have fewer shares trading hands than big caps do. So, when investors jump into a trendy small cap because it has a hot new product out or a big bump in profits, the price rises quickly.
Big caps, on the other hand, have so many shares outstanding that even huge breakthroughs can have a muted impact on the stock price.
In our Sept. 22 conversation, I noted that underperforming small caps are the main reason the tech-centric Nasdaq Composite Index has recently fallen out of favor.
While that may be true, we usually focus on bigger tech companies at Strategic Tech Investor, and I've uncovered several that are showing excellent technicals.
I've been fascinated with the visual display of data since just about forever. While I was earning my honors economics degree, I spent many, many hours drilling deep into supply and demand curves.
That background gave me the expertise I needed to create my own unique charting process. I call it the Real Demand Tracking System. As its name suggests, my system tells me about the real demand for a stock over any period I want to measure.
I use my Real Demand Tracking System regularly to help me find winning stocks for my premium trading service, Radical Technology Profits. While I subscribe to a professional charting service, I heavily customize it to improve my odds of finding big winners.
Today, however, I'm going to simplify technical analysis and use the free tools available at Yahoo! Finance. It's a fast and easy way to check a stock's chart action.
And remember, we're going backward today.
First, we're going to look at the chart. Then, we'll examine the fundamentals driving the stock. Finally, I'll show you how you can create these same charts yourself.
Let's get started…
Join the conversation. Click here to jump to comments…
About the Author
Michael A. Robinson is one of the top financial analysts working today. His book "Overdrawn: The Bailout of American Savings" was a prescient look at the anatomy of the nation's S&L crisis, long before the word "bailout" became part of our daily lexicon. He's a Pulitzer Prize-nominated writer and reporter, lauded by the Columbia Journalism Review for his aggressive style. His 30-year track record as a leading tech analyst has garnered him rave reviews, too. Today he is the editor of the monthly tech investing newsletter Nova-X Report as well as Radical Technology Profits, where he covers truly radical technologies – ones that have the power to sweep across the globe and change the very fabric of our lives – and profit opportunities they give rise to. He also explores "what's next" in the tech investing world at Strategic Tech Investor.