When Munehia Homma first created candlestick charts in they 1700s, he had no idea it’d change the way we look at stocks 300 years later.
To him, candlestick charting was meant for the rice trade.
He’d record the opening day’s price of rice, the low and the close. And over time, he’d begin to see price patterns in his recordings, mapping out repetitive signals in the price bars. He’d soon give them names, like spinning tops, dojis, and hanging man – candlestick names we still use to this day. The discovery of such patterns helped him successfully predict future direction of rice prices, giving him a significant advantage over other traders.Read More
When you pull a rubber band too far, what happens?
Eventually, it snaps back. Stocks do the same.
At times, extreme bouts of fear can send a stock tumbling to excessive unsustainable lows. Other times, extreme bouts of greed can send a stock up too much, too soon. And if we can spot those very extremes, therein lies opportunity.Read More
Oil is a fickle beast.
Throughout 2017, oil prices have rallied and stumbled more times than most of us care to remember thanks to global supply and demand issues.
All thanks to supply-demand imbalances, and hope.
However, there are two ways to spot when and where oil could pivot and turn.
One way is to track excessive bouts of fear and greed, simply by buying when others become far too fearful, and selling when others become far too greedy.Read More
The $89.7 billion man has argued against borrowing money to invest.
Unfortunately, many investors have been doing it anyway.
Greed, he says, is the primary driver of margin debt.
Then again, we all know margin-trading carries a good amount of risk.Read More
In late 2015, Ferrari (RACE) raced onto the market floor at a high of $60 a share.
However, as we explained prior to its IPO, it was a terrible buy, overvalued at the time with a $12 billion IPO. Initial requests for shares had exceeded supply by 10 times, as we noted.
Investors were still excited. Anticipation was high.Read More
One of the worst things that traders still do to this day is ignore stocks at 52-week lows, even when it comes to the biggest stocks in the world.
But to be honest with you – that’s exactly when you want to buy. When everyone else is selling and becoming fearful of big named stocks, buy.
The question then becomes – how can we tell where the bottom is?
We simply abide by what herd mentality and momentum is telling us, which we can decipher using several technical indicators and fundamental analysis.Read More