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trading strategies

Trading Strategies

Here's the All-Important Difference Between a "Cheap Stock" and an Undervalued One

Millions of investors are focused, very myopically, on short-term trading at the moment. That's perfectly understandable, but it's a huge mistake in a mid-term election year.

Why?

Because the single biggest risk facing investors today is not that the numbers driving our economy – earnings, jobs, interest rates – collapse, but rather that they're better than "everyone" expects.

Too much "short-termism" results in too many losses, especially at this time of year, when traders are looking to do two things: a) clean house on their portfolios, and b) get in line for big year-end bonuses.

To be sure, the business cycle is long in the tooth; so is the bull market rally. But nowhere is it written in stone that either of those things must come to an end.

What is written, however, are the things that tend to produce huge profits time and again for savvy investors - in any market, to boot...

Trading Strategies

Why Bears Will Enjoy "Best in Breed" Profits This Month

The "September slide" this past week has been excellent for my paid-up subscribers – even some positions that had been sluggish moved higher – because we were well prepared for stocks to gap lower.

We closed out two more winners in Western Digital Corp. puts, and on the "other side" of the market, DSW Inc. calls for a nice 174% and 78% in gains.

Those results certainly show how our proven "Best in Breed" (BIB) stock-picking methodology works hand in hand with portfolio balance. A mix of calls, puts, bullishness, and bearishness has helped us capitalize on the market's recent swings.

Right now, BIB is showing retailers as an area of strength for the next couple of months, which is why I've been so bullish on them here in Money Morning recently – just look at our DSW position. 

Meanwhile, BIB bull's-eyed the technology sector as a laggard, and sure enough, it's no longer leading the market higher. Puts in WDC yielded a huge profit. And our other bearish plays in the sector are bouncing back in our favor.

Now let's take a look at what the market's showing us for the next four weeks or so...

Trading Strategies

Here's Where to Find the Biggest Outperformers for the Rest of 2018

Here's a big prediction, straight from my Best in Breed screen: A huge portion of the profits you'll make for the next three months will be in just two sectors – retail and consumer discretionary.

Here's why I know…

See, instead of following overhyped slogans like "Sell in May and go away" – which would have cost you about 8% in returns based on the S&P 500 since May 1 – I prefer to actually look at what the data really says about seasonality. Crazy, right?

The data's telling me that the back-to-school, Halloween, and holiday shopping periods are three of the most fruitful selling seasons for this special group of stocks.

I'm going to let the numbers do the talking...

Trading Strategies

These "Desert Island" Stocks Have Mouthwatering Profit Potential

Bad news: The plane crashed.

You've washed up on a desert island, the sole survivor. You're stranded thousands of miles from civilization. It could be years before you encounter another human being. 

When the chips are down like this, it's all-important to take inventory of the wreckage and your immediate surroundings.

Your very life depends on it. So, a look around your new home reveals:

Scrap airplane aluminum for crafting shelter and weapons…

A source of fresh water…

Natural fibers for fashioning rope, animal traps, and clothing…

Coconuts and pineapples for distilling booze of some kind…

A full set of Louis L'Amour novels…

An anthropomorphized volleyball to keep you from descending into madness…

Top-flight stocks that will pay you unreasonably high returns for the rest of your life…

Uh-oh!

In the stocks department, you've come up critically short. After all, the best stocks are the ones you don't have to worry about for years on end, and you won't be talking to your broker anytime soon – unless you want to pretend the volleyball is your broker or try and reach him on the other end of a coconut telephone.

Not to worry. All is not lost. Because I've got you covered with these, my very own personal "desert island stocks."

Here they are...

Trading Strategies

Why I Love to See This Extreme Shape in My Charts

Aristotle is traditionally credited with the concepts behind the familiar idiom "nature abhors a vacuum."

It's just a way of saying, "when something is moved out of a space, something else will move in," or, "there is no truly empty space."

Some incredible minds have grappled with the ramifications of this concept over the 23 centuries since Aristotle.

To name a few: Galileo, Blaise Pascal, Thomas Hobbes, Robert Boyle, and even calculus co-inventors Sir Isaac Newton and Gottfried Leibniz have all weighed in.

Modern science has answered this question… with a few equivocations.

From a quantum perspective, there is no true empty space – it would still be filled with quantum fields. Nonetheless, there's a good deal of mostly empty space and plenty of partial vacuums.

Just like nature, the markets find a few things abhorrent – most of all the parabola.

A parabola is, at its essence, an exponential function. Galileo in his final, 1638 work, "Discourses on Two New Sciences," proved that the trajectory of a projectile traveling through a non-resisting medium is a parabola.

Like a cannonball or bullet dropping back to the ground, trading patterns that look like parabolas inevitably come back to earth as well.

For investors, the results can be disastrous. But for nimble traders on the right side of the "landing," a parabola can be extremely lucrative...