FINANZAS LIBRES

COMMENTS for Friday July 24, 2009

Stock trading opportunities come in all shapes and sizes, yet the very best trades share at least one important characteristic – above-average price movement. In any market it is important to find stocks that are moving. While the definition of a “moving” stock is somewhat subjective, there are several things to consider when looking for good stocks on the move.

The first place to look is at stocks that are making new highs and new lows. Stocks that have just set new highs usually make ideal buy-side candidates. The ability to rise to new heights reflects investor interest, and indicates the demand for shares is in excess of available supply.

On the flip side, stocks making new lows are exhibiting extreme weakness. This usually results in even more weakness as wave after wave of investors that are tired of losing money give up and bail out. The list of New Lows often contains stocks that are begging to be shorted.

As a rule, new-highs lead to more strength, while new-lows point to more decline ahead. To get into trends early, look for stocks that have just made new four-week highs or lows. Also check the slope of the 20 or 22-day moving average. If it’s leaning decidedly in one direction or the other, you can assume that the trend is relatively stable.

Keep in mind that although the purpose of trading is to be profitable, we don’t have to catch 100% of every move. Find stocks that are active within your chosen time frame, and take a reasonable amount out of the anticipated movement.

Good Trading!!!

Ricardo H Goldman Director of Education American Academy Wall Street www.daytradeya.com Tel. 305.476.9505 212.655.4455 5199.1165 (Desde Argentina)