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When it comes to profits, I aim high. My readers do, too.
In fact, if you're reading this now, you may be one of the readers I'm thinking of. I have heard time and time again from Wall Street Insights & Indictments subscribers who have used my advice here to make serious profits. The ones who have stuck with me the longest are the same ones who have seen the biggest gains roll into their bank accounts, and nothing makes me happier.
For those of you who still have doubts, or are perhaps new to my services, I want to take the time to answer a question I've been getting a lot lately.
We tend to set our lofty sights on stocks that are heading south… but there are absolutely forces that can still push those stocks higher. If the market's going gangbusters and everybody's gung ho about stocks going to the moon, even crap stocks can (and often do) get pulled up, too.
In my mind, there are three distinct reasons that stocks that should be trampled on and trampled out of go up.
Three Reasons a Loser Stock Pops
The first reason has to do with psychology, perceived value, and bargain hunting.
It's simple. In a bull run that investors think will continue, previously overlooked little piggies get noticed as new money is applied, and leveraged borrowing against winning positions generates additional investment capital.
This can send plenty of traders digging in the waste bin for those supposed bargain stocks and perceived "value" stocks. These aren't the same thing, though they are easily conflated by the uninitiated.
In a rotation, also known as money that goes looking for sectors or companies that haven't participated in the latest run-up, these deceptive stocks get bid up. That bid rarely lasts, and soon enough the stock will be right where it was before, if not lower.
The second reason these piggies can go up with a rising market depends on the games smart investors play with them. These investors, often professional traders with capital to play with, use the bull market to get into these stocks and just start taking offers, trying to push their prices (sometimes dramatically) higher.
The game is to, essentially, trigger panic buying by traders who are short targeted stocks. It sometimes doesn't take a lot of buying pressure to do the deed, while other times it takes a lot of money and requires a concentrated set of actions.
I used to play that game to my great amusement and almost always to my great profitability when I learned how to read fear and greed, first in traders' eyes on the floor and then "upstairs" when I was surrounded with metrics to help me read the crowd from a distance.
But to greener investors who aren't familiar with these mane…
About the Author
Shah Gilani is the Event Trading Specialist for Money Map Press. In Zenith Trading Circle Shah reveals the worst companies in the markets - right from his coveted Bankruptcy Almanac - and how readers can trade them over and over again for huge gains. He also writes our most talked-about publication, Wall Street Insights & Indictments, where he reveals how Wall Street's high-stakes game is really played.