What are they saying: When everybody is running around saying how great a stock is, then everybody who can buy probably already has, and the only direction for the stock to go at that point is down. When it is obvious and exciting to everyone, it's too late.
Class in session: It does not pay to argue with the market. Experience teaches that fighting the market can be a very expensive lesson.
Market index: Buy when market indexes are in an uptrend. This reduces your risk on the long side and improves the longevity of bullish moves in the stocks that you own.Know the rules...It just makes COMMON SENSE!When shorting, keep in mind that if a stock pays a dividend while you are holding a short position, you must pay back that dividend. Most investors are unaware of this simple fact but it makes complete sense. You are borrowing the stock and any dividend payment should be owed to the "actual owner" of the stock. This rule can mean the difference between profit and loss.When inflation is a concern, gold stocks tend to do very well. So, when inflation is on the move, look to the golds for golden profits.How long should it be?A cup and handle base should be at least six to eight weeks in length, starting with the first week closing down off the stock's top. What a great formation to trade!
Follow through day: When you get a follow-through day, signaling that the market is beginning a new uptrend, the vast majority of investors simply do not believe it's for real. They are scared to death and are so busy licking their wounds from all negatively of a downtrend they they are conditioned to doubt and be afraid of every rally. Many of the best bull runs start out this way.
The trend is your friend. Position your trades based on the market's overall direction. It just makes COMMON SENSE! Faulty ditribution If the market logs three to five ditribution days, and most of these days show an index price spread from the high to the low of the day that is very small, and the amount of the actual price decline from the prior day is also very small, even though there is a volume increase and the price closes down, the movement is not significant. These types of distribution days may not be enough to cause the market to turn down.
Accumulation: The average investor, stockbroker, or academic never takes the time to check or learn to read a chart properly or, due to disbelief or pure ignorance, does not understand how important it is to be able to spot volume accumulation or distribution in a chart pattern. This is like a doctor never taking blood tests or x-rays to see what is actually going on with a patient's health.MIstakes Plot out your mistakes on charts, study them, and write some additional rules in order to correct your mistakes andthe actions that cost you money.
Just like a good boy scout…BE PREPARED. A day of reckoning is coming and if we are ready… major profits will follow.
Class dismissed...It just makes COMMON SENSE!
Have a profitable day,
MARC BARHONOVICH
Wednesday, January 17, 2007
Sorting the Wheat From the Chaff - How to Invest Carefully
Invest Carefully Whether or not you're a day trader, your best protection as an investor is to know what you're buying, what the ground rules are when you buy and sell, and what level of risk you're assuming.
If you decide to do business with a company offering day trading systems or advisory services, it's important to check it out before putting your money on the line.
If the trading system involves stocks, call your state securities regulator to find out whether the company has ever been disciplined or has complaints against it. Look in the government section of your phone book or visit the North American Securities Administrators Association's website at www.nasaa.org. You also can get a firm's disciplinary history by calling the National Association of Securities Dealers-Regulation Public Disclosure Program at 1-800-289-9999 or by visiting its website at www.nasdr.com/2000.htm. If the trading system involves commodity futures or options, call the National Futures Association toll-free at 1-800-621-3570 or 1-800-676-4NFA (4632).
Free online trading is a popular phrase these days. All over the Internet there are sites that promise free trading and high profits. Unfortunately, there are few things in life that are ever really free and online trading is no exception.Another thing to look out for is companies that offer commission free online trading. While their motives may initially appear gallant, the truth of the matter is that no company can remain afloat without making a profit. They may offer 0% commission, but the chances are very good that there will be other hidden costs involved such as an exorbitant monthly fee for using their trading software. Alternatively, the free commission may only apply if you make a certain amount of deals every month without fail. Read the terms and conditions very carefully and do not hesitate to give brokers a call should you have any questions. Honest companies will have no problem explaining their policies to you in great detail, while fraudulent individuals are likely to be more tight lipped.
Promises of free trading are not the only trading scams that are popping up on the Internet. Sadly, there are a number of dishonest companies out there who make their profits by exploiting the naivety of less knowledgeable individuals all over the world. There are hundreds of online stock trading scams floating around. Some can be spotted from a mile off, while others are slightly more difficult to identify. Some of the more common Internet trading schemes include: Hype and dump stocks Pyramid schemes Spam stock offers Ponzi scams The simplest and most effective way to avoid getting roped in by a scam is to always keep in mind the old saying: when something looks too good to be true, it probably is. Any promises that you will make instant profits, suffer no losses and encounter no risks when buying a particular stock are more than likely a lie. Research independent companies carefully and always double check offers that you think may be suspicious. Look for trading companies that have been approved by registered bodies such as the Securities and Exchange Commission (SEC).In the event that you do fall prey to a free online trading scam or other type of unscrupulous trading scheme, your best option is to report the culprit to the Securities Exchange Commission. Their complaints division can be accessed online at http://www.sec.gov/complaint.shtml . They will investigate the company or individual in question and take the necessary steps to ensure that they are stopped.
In addition:
Look carefully at the basis for any claims the company makes. Talk to other traders who have used the company. Check out the company with the Better Business Bureau and the local consumer protection agency.
Invest Carefully Whether or not you're a day trader, your best protection as an investor is to know what you're buying, what the ground rules are when you buy and sell, and what level of risk you're assuming.
If you decide to do business with a company offering day trading systems or advisory services, it's important to check it out before putting your money on the line.
If the trading system involves stocks, call your state securities regulator to find out whether the company has ever been disciplined or has complaints against it. Look in the government section of your phone book or visit the North American Securities Administrators Association's website at www.nasaa.org. You also can get a firm's disciplinary history by calling the National Association of Securities Dealers-Regulation Public Disclosure Program at 1-800-289-9999 or by visiting its website at www.nasdr.com/2000.htm. If the trading system involves commodity futures or options, call the National Futures Association toll-free at 1-800-621-3570 or 1-800-676-4NFA (4632).
Free online trading is a popular phrase these days. All over the Internet there are sites that promise free trading and high profits. Unfortunately, there are few things in life that are ever really free and online trading is no exception.Another thing to look out for is companies that offer commission free online trading. While their motives may initially appear gallant, the truth of the matter is that no company can remain afloat without making a profit. They may offer 0% commission, but the chances are very good that there will be other hidden costs involved such as an exorbitant monthly fee for using their trading software. Alternatively, the free commission may only apply if you make a certain amount of deals every month without fail. Read the terms and conditions very carefully and do not hesitate to give brokers a call should you have any questions. Honest companies will have no problem explaining their policies to you in great detail, while fraudulent individuals are likely to be more tight lipped.
Promises of free trading are not the only trading scams that are popping up on the Internet. Sadly, there are a number of dishonest companies out there who make their profits by exploiting the naivety of less knowledgeable individuals all over the world. There are hundreds of online stock trading scams floating around. Some can be spotted from a mile off, while others are slightly more difficult to identify. Some of the more common Internet trading schemes include: Hype and dump stocks Pyramid schemes Spam stock offers Ponzi scams The simplest and most effective way to avoid getting roped in by a scam is to always keep in mind the old saying: when something looks too good to be true, it probably is. Any promises that you will make instant profits, suffer no losses and encounter no risks when buying a particular stock are more than likely a lie. Research independent companies carefully and always double check offers that you think may be suspicious. Look for trading companies that have been approved by registered bodies such as the Securities and Exchange Commission (SEC).In the event that you do fall prey to a free online trading scam or other type of unscrupulous trading scheme, your best option is to report the culprit to the Securities Exchange Commission. Their complaints division can be accessed online at http://www.sec.gov/complaint.shtml . They will investigate the company or individual in question and take the necessary steps to ensure that they are stopped.
In addition:
Look carefully at the basis for any claims the company makes. Talk to other traders who have used the company. Check out the company with the Better Business Bureau and the local consumer protection agency.
Wholesale prices moderated in December
while industrial production rebounded, just the results the Federal Reserve is hoping to achieve to keep the economic expansion on track.
The Federal Reserve reported Wednesday that industrial production rose by 0.4 percent last month following two months of 0.1 percent declines. The increase reflected higher output at factories.
Meanwhile, the Labor Department said that its Producer Price Index rose by 0.9 percent in December. That was down sharply from a 2 percent jump in November.
The combination of a rebounding economy and moderating inflation is what the Fed has been hoping to achieve with its two-year campaign to raise interest rates as a way to slow growth enough to keep inflation at bay.
In its latest survey of business conditions around the country, the Fed said Wednesday that the economy was expanding at a modest pace at the beginning of the year in spite of a severe slowdown in housing activity and sluggish auto sales.
The Fed's beige book, which will help formulate interest rate policy when officials meet on Jan. 30-31, found prices increasing only moderately, helped by an easing in energy costs.
For the whole year, wholesale prices were up just 1.1 percent, down sharply from the 5.4 percent surge in 2005, reflecting a slowdown in energy costs. The PPI measures cost pressures before they get to the consumer.
Gasoline prices surged to record levels above $3 per gallon last summer, but energy prices have since moderated a bit and that helped to cap the rise in inflation in 2006. For 2006, energy costs were down by 2 percent after having soared by 23.9 percent in 2005.
The 0.4 percent rise in industrial production reflected a 0.7 percent advance in output at the nation's factories and a 0.8 percent rise in the category that includes oil drilling. That helped to offset a 2.6 percent drop in utility output, a decline that reflected the unseasonably mild weather in December.
The overall wholesale price increase of 1.1 percent in 2006 was the smallest advance since prices actually fell by 1.6 percent in the recession year of 2001.
The Federal Reserve pushed interest rates up at 17 consecutive meetings over two years in an effort to slow economic growth enough to restrain inflation pressures.
While there had been fears that the central bank had overdone the credit-tightening, recent upbeat reports indicate the economy will achieve the hoped-for soft landing rather than a more severe outcome such as a recession.
For December, energy costs were up 2.5 percent after an even bigger 6.1 percent rise November. But with global oil prices falling to 19-month lows, analysts believe further declines in energy are on the way.
Wholesale gasoline prices rose by 7.1 percent while home heating oil costs were up 4 percent and natural gas intended for home use was up 0.7 percent.
Food costs rose by 1.7 percent in December, the biggest increase since October 2003, reflecting higher costs for fruits and vegetables, chicken and fish. Analysts said food costs are likely headed even higher in coming months, reflecting damage to citrus crops from the recent winter storms.
Excluding volatile food and energy, the core rate of inflation edged up just 0.2 percent in December, far below the 1.3 percent November surge which had been caused by a huge jump in the cost of new cars and trucks.
In December, new car prices fell by 0.2 percent while light truck prices, a category that includes sport utility vehicles, rose by 0.7 percent.
Core inflation showed an increase of 2 percent for all of 2006, up slightly from a 1.7 percent increase for all of 2005.
while industrial production rebounded, just the results the Federal Reserve is hoping to achieve to keep the economic expansion on track.
The Federal Reserve reported Wednesday that industrial production rose by 0.4 percent last month following two months of 0.1 percent declines. The increase reflected higher output at factories.
Meanwhile, the Labor Department said that its Producer Price Index rose by 0.9 percent in December. That was down sharply from a 2 percent jump in November.
The combination of a rebounding economy and moderating inflation is what the Fed has been hoping to achieve with its two-year campaign to raise interest rates as a way to slow growth enough to keep inflation at bay.
In its latest survey of business conditions around the country, the Fed said Wednesday that the economy was expanding at a modest pace at the beginning of the year in spite of a severe slowdown in housing activity and sluggish auto sales.
The Fed's beige book, which will help formulate interest rate policy when officials meet on Jan. 30-31, found prices increasing only moderately, helped by an easing in energy costs.
For the whole year, wholesale prices were up just 1.1 percent, down sharply from the 5.4 percent surge in 2005, reflecting a slowdown in energy costs. The PPI measures cost pressures before they get to the consumer.
Gasoline prices surged to record levels above $3 per gallon last summer, but energy prices have since moderated a bit and that helped to cap the rise in inflation in 2006. For 2006, energy costs were down by 2 percent after having soared by 23.9 percent in 2005.
The 0.4 percent rise in industrial production reflected a 0.7 percent advance in output at the nation's factories and a 0.8 percent rise in the category that includes oil drilling. That helped to offset a 2.6 percent drop in utility output, a decline that reflected the unseasonably mild weather in December.
The overall wholesale price increase of 1.1 percent in 2006 was the smallest advance since prices actually fell by 1.6 percent in the recession year of 2001.
The Federal Reserve pushed interest rates up at 17 consecutive meetings over two years in an effort to slow economic growth enough to restrain inflation pressures.
While there had been fears that the central bank had overdone the credit-tightening, recent upbeat reports indicate the economy will achieve the hoped-for soft landing rather than a more severe outcome such as a recession.
For December, energy costs were up 2.5 percent after an even bigger 6.1 percent rise November. But with global oil prices falling to 19-month lows, analysts believe further declines in energy are on the way.
Wholesale gasoline prices rose by 7.1 percent while home heating oil costs were up 4 percent and natural gas intended for home use was up 0.7 percent.
Food costs rose by 1.7 percent in December, the biggest increase since October 2003, reflecting higher costs for fruits and vegetables, chicken and fish. Analysts said food costs are likely headed even higher in coming months, reflecting damage to citrus crops from the recent winter storms.
Excluding volatile food and energy, the core rate of inflation edged up just 0.2 percent in December, far below the 1.3 percent November surge which had been caused by a huge jump in the cost of new cars and trucks.
In December, new car prices fell by 0.2 percent while light truck prices, a category that includes sport utility vehicles, rose by 0.7 percent.
Core inflation showed an increase of 2 percent for all of 2006, up slightly from a 1.7 percent increase for all of 2005.
Scale Trading is a disciplined, mechanical approach to buying low and selling high. It is based on the economic law of Supply and Demand, built on the premise that a physical commodity has an intrinsic value and, therefore, will not likely become valueless. For example, if the price of corn falls below the cost of its production, growers will be motivated to cut back or switch to another more profitable crop, thereby reducing the available supply for the coming year. As supply shrinks, price eventually moves higher to ration demand. This in turn attracts producers to increase production, thereby increasing supply, and the process starts all over again.
The concept of intrinsic value does not necessarily apply to other investments. For instance, the stock of today's hot company could actually go to zero due to any number of micro or macro economic circumstances, while a bushel of corn has an intrinsic value virtually assuring that its price will not go to zero.
The "what works" for the Scale Trading approach is that we can outline our trading plan ahead of time by carefully evaluating current supply/demand statistics and then comparing those with the commodity's historical price range. This gives us the ability to then pinpoint the price at which we want to begin our scale down buying and, most importantly, calculate the total capital we will likely need to maintain that scale under our worst case scenario.
By sticking with "Mother Nature" commodities, particularly those which are grown for human consumption, we ensure that even the worst case scenario will eventually give way to a recovery in prices. While our worst case scenario does not represent a guarantee of what our ultimate exposure will be, the principles that drive the law of supply and demand are the best tools we have found for long term success in the commodity markets.
Scale trading provides the edge and hedged scale trading sharpens that edge, allowing experienced traders to stay on both sides of the market and use their edge most effectively. Understanding Hedged Scale Trading covers everything traders need to know to work with the increased leverage provided by scale trading while covering their backs against the inevitable moments when, despite taking every precaution, they find fast-moving markets moving against them.
Working with the Scale Trading example
What we need, then, is to develop a system that will accomplish this allocation of capital to our strongest and best-performing stocks. As it turns out, we can do this by simply reversing the scale trading approach learned about in the last chapter. So in other words, we add equal dollar amounts to our stock positions as they move up in price, instead of when they move down in price.
Everybody likes to buy a bargain - the opportunity to get something they want before prices get back to “normal.” That’s the premise behind the trading approach known as “scale trading.” Like most methods, scale trading is not a cut-and-dried, easy way to trade. For one thing, you might decide the price is already low and just can’t go any lower. And then it goes lower - much lower, as recent traders in energy, hogs, sugar, copper, soybeans and other markets can attest.
For another thing, even though everyone recognizes the price is unusually low, not enough buyers step in and the market just sits at the low end of its historic range for an extended period of time until buyers give up. In a nutshell, scale trading is for those who are very patient and have very deep pockets. But the current situation is unique and may be the ideal climate for scale trading. Normally, one or two markets may be candidates for scale trading each year, but virtually every commodity has offered scale traders the potential for substantial rewards in the last year. In addition to patience and money, here is the combination you need for scale trading: Physical commodities only - something that is grown or mined and is consumed, therefore subject to supply and demand forces. Historically low prices - you can determine that several ways but basically all you have to do is look at a long-term price chart for the last 20-25 years and divide the price range from low to high in thirds. A market in the lower third is a candidate for scale trading although you may not want to implement such a plan unless prices fall into, say, the bottom 10% of the total range or a more recent range of, say, the last 10-15 years. Scale Trading Strategy - If you are Warren Buffett buying cheap silver or stocks, you can just hold on for a price increase that inevitably will come, although it may take years. Futures trading, however, requires something more than just buy and hold to capitalize on low prices. Soybeans provide a good example of both the promise and problem that scale trading offers. Soybean prices have been below $5.25 a bushel only a couple of times since the early 1970s so when prices continued a long slide to new lows in early 1999, it looked like a good scale trading opportunity. With $5.25 as your starting point, you decide to buy one contract every time prices decline 25 cents and sell that contract when it rallies 25 cents. When prices hit $5, you buy one contract - after all, prices can’t go much lower. You ride out a further decline and when prices rally at the end of March, you sell the contract. You have made 25 cents or $1,250. Scale trading looks very promising. Then prices fall and you buy at $5 again. This time the rally doesn’t go high enough to trigger your sell signal so you are holding one contract. As prices hit the skids, you buy another contract at $4.75, another at $4.50 and another at $4.25 (red lines). At the low around $4.05 in July, your fourcontract position is down almost $21,000, counting all margins, trading losses and commissions. Now, scale trading looks a little scary. If prices linger at the lows and positions have to be rolled over to the next contract month, that would introduce another element of uncertainty.
The concept of intrinsic value does not necessarily apply to other investments. For instance, the stock of today's hot company could actually go to zero due to any number of micro or macro economic circumstances, while a bushel of corn has an intrinsic value virtually assuring that its price will not go to zero.
The "what works" for the Scale Trading approach is that we can outline our trading plan ahead of time by carefully evaluating current supply/demand statistics and then comparing those with the commodity's historical price range. This gives us the ability to then pinpoint the price at which we want to begin our scale down buying and, most importantly, calculate the total capital we will likely need to maintain that scale under our worst case scenario.
By sticking with "Mother Nature" commodities, particularly those which are grown for human consumption, we ensure that even the worst case scenario will eventually give way to a recovery in prices. While our worst case scenario does not represent a guarantee of what our ultimate exposure will be, the principles that drive the law of supply and demand are the best tools we have found for long term success in the commodity markets.
Scale trading provides the edge and hedged scale trading sharpens that edge, allowing experienced traders to stay on both sides of the market and use their edge most effectively. Understanding Hedged Scale Trading covers everything traders need to know to work with the increased leverage provided by scale trading while covering their backs against the inevitable moments when, despite taking every precaution, they find fast-moving markets moving against them.
Working with the Scale Trading example
What we need, then, is to develop a system that will accomplish this allocation of capital to our strongest and best-performing stocks. As it turns out, we can do this by simply reversing the scale trading approach learned about in the last chapter. So in other words, we add equal dollar amounts to our stock positions as they move up in price, instead of when they move down in price.
Everybody likes to buy a bargain - the opportunity to get something they want before prices get back to “normal.” That’s the premise behind the trading approach known as “scale trading.” Like most methods, scale trading is not a cut-and-dried, easy way to trade. For one thing, you might decide the price is already low and just can’t go any lower. And then it goes lower - much lower, as recent traders in energy, hogs, sugar, copper, soybeans and other markets can attest.
For another thing, even though everyone recognizes the price is unusually low, not enough buyers step in and the market just sits at the low end of its historic range for an extended period of time until buyers give up. In a nutshell, scale trading is for those who are very patient and have very deep pockets. But the current situation is unique and may be the ideal climate for scale trading. Normally, one or two markets may be candidates for scale trading each year, but virtually every commodity has offered scale traders the potential for substantial rewards in the last year. In addition to patience and money, here is the combination you need for scale trading: Physical commodities only - something that is grown or mined and is consumed, therefore subject to supply and demand forces. Historically low prices - you can determine that several ways but basically all you have to do is look at a long-term price chart for the last 20-25 years and divide the price range from low to high in thirds. A market in the lower third is a candidate for scale trading although you may not want to implement such a plan unless prices fall into, say, the bottom 10% of the total range or a more recent range of, say, the last 10-15 years. Scale Trading Strategy - If you are Warren Buffett buying cheap silver or stocks, you can just hold on for a price increase that inevitably will come, although it may take years. Futures trading, however, requires something more than just buy and hold to capitalize on low prices. Soybeans provide a good example of both the promise and problem that scale trading offers. Soybean prices have been below $5.25 a bushel only a couple of times since the early 1970s so when prices continued a long slide to new lows in early 1999, it looked like a good scale trading opportunity. With $5.25 as your starting point, you decide to buy one contract every time prices decline 25 cents and sell that contract when it rallies 25 cents. When prices hit $5, you buy one contract - after all, prices can’t go much lower. You ride out a further decline and when prices rally at the end of March, you sell the contract. You have made 25 cents or $1,250. Scale trading looks very promising. Then prices fall and you buy at $5 again. This time the rally doesn’t go high enough to trigger your sell signal so you are holding one contract. As prices hit the skids, you buy another contract at $4.75, another at $4.50 and another at $4.25 (red lines). At the low around $4.05 in July, your fourcontract position is down almost $21,000, counting all margins, trading losses and commissions. Now, scale trading looks a little scary. If prices linger at the lows and positions have to be rolled over to the next contract month, that would introduce another element of uncertainty.
We feel that you should use "common sense" when choosing investment advice, and managing your portfolio. We do not offer a magic bullet to make you rich in a few days, but our track record speaks for itself, as CSI has outperformed most systems and funds consistently, especially the S&P.
DARK CLOUDS ON THE HORIZON
OIL has given investors a much needed respite, dropping temporarily back below $50 per barrel. Don’t get too comfortable because it won’t last too long. We expect demand to start rising again this summer and there will be no way to increase supply. Oil prices will again rise in earnest and gas prices will move up right along with it.
One thing that Wall Street refuses to acknowledge and investors continue to think is a temporary apparition is higher oil prices. HIGHER OIL PRICES ARE HERE TO STAY.
With the unstoppable growth of China and India and the US consumers “bigger is better” consumption attitude, OIL prices will remain high. In fact, it will take at least a decade and even higher oil prices to cause consumers to become much more energy conscious and conservative. Only then will oil prices begin to trend lower but that trend could begin from prices that no one ever thought was possible…over $100 per barrel.
The fact that oil will remain high and most probably move higher in the future will keep a cap on the stock market. It also raises the specter of inflation which keeps the FED raising interest rates. This too keeps a lid on the stock market.
Rising oil and rising interest rates cause the consumer to slowdown spending and corporate profits to slowdown. All of these in moderation will keep a lid on how high the market can go over the next few years. An acceleration in any of these items and the market could head back into a renewed bear market which should take us down to retest the bear market lows.
For COMMON SENSE INVESTORS you must be ready to profit when we get the market moves we were looking for (like now) and you must always keep your losses small. As the market continues to move higher over the next few weeks make sure that you take some partial profits and move your stops higher so that you are ready to get out of a position once the market turns lower. We also want to use this market rally to look for good stocks to short, so that we can profit as the market heads lower. I expect the summer to be dreadfully slow(much like last summer) and the real profits will come from the downside shorting stocks that disappoint. We will keep you apprised of the stocks that meet our criteria. Lets see what the new year will bring! Our investment newsletter will add tips throughout the year.
Have a Profitable 2006,
Marc Barhonovich
DARK CLOUDS ON THE HORIZON
OIL has given investors a much needed respite, dropping temporarily back below $50 per barrel. Don’t get too comfortable because it won’t last too long. We expect demand to start rising again this summer and there will be no way to increase supply. Oil prices will again rise in earnest and gas prices will move up right along with it.
One thing that Wall Street refuses to acknowledge and investors continue to think is a temporary apparition is higher oil prices. HIGHER OIL PRICES ARE HERE TO STAY.
With the unstoppable growth of China and India and the US consumers “bigger is better” consumption attitude, OIL prices will remain high. In fact, it will take at least a decade and even higher oil prices to cause consumers to become much more energy conscious and conservative. Only then will oil prices begin to trend lower but that trend could begin from prices that no one ever thought was possible…over $100 per barrel.
The fact that oil will remain high and most probably move higher in the future will keep a cap on the stock market. It also raises the specter of inflation which keeps the FED raising interest rates. This too keeps a lid on the stock market.
Rising oil and rising interest rates cause the consumer to slowdown spending and corporate profits to slowdown. All of these in moderation will keep a lid on how high the market can go over the next few years. An acceleration in any of these items and the market could head back into a renewed bear market which should take us down to retest the bear market lows.
For COMMON SENSE INVESTORS you must be ready to profit when we get the market moves we were looking for (like now) and you must always keep your losses small. As the market continues to move higher over the next few weeks make sure that you take some partial profits and move your stops higher so that you are ready to get out of a position once the market turns lower. We also want to use this market rally to look for good stocks to short, so that we can profit as the market heads lower. I expect the summer to be dreadfully slow(much like last summer) and the real profits will come from the downside shorting stocks that disappoint. We will keep you apprised of the stocks that meet our criteria. Lets see what the new year will bring! Our investment newsletter will add tips throughout the year.
Have a Profitable 2006,
Marc Barhonovich
MainScale™ APS™ only invests in good undervalued BLUE CHIP STOCKS and provides the Automated Profit Strategy to tell you exactly where to buy and where to sell. The buy and sell orders can actually be placed at night before you go to bed. Wake up in the morning and go about your day. Once you get home in the evening, check to see what profits you made and then adjust your orders accordingly for the next day.
WE ARE SO CONFIDENT IN THE MainScale™ APS™ STRATEGY that if you invest in at least 5 of our recommended stocks and place the orders just as the strategy instructs and do NOT generate enough profits to pay for your subscription AND dinner to celebrate your profits with a friend, we will refund your money!
Guaranteed!
SUBSCRIBE NOW!
"I've been using MainScale for 17 weeks now and it's an amazing system for investing. An automatic, disciplined way to buy into weakness and sell into strength. Those counter-productive human emotions of fear and greed have been removed from my investment decisions…the only emotion I have now in investing is satisfaction of seeing consistent positive weekly returns. My portfolio has gained an average of 1.13% per week over the last 17 weeks" RANDY
A TRADING SYSTEM IS KEY
Most investment newsletters I have received over the years typically rely on one person picking a stock that you hope is a winner: the "Home Run" approach. I'm sure you have received these newsletters touting a pick up over 100% or a service that you have to be sitting at your desk waiting to receive. It never failed that when the email or fax crucial to my investment came through, I would be out of the office and miss the entry point to buy or the proper place to sell. This is one investment newsletter that delivers, and is operated with Integrity.
CONSISTENT, PREDICTABLE PROFITS DAY IN & DAY OUT!
The MainScale™ APS™ Automated Trading System gives you in advance each stock to buy for the month; and the price to begin buying each stock. Once a stock is purchased you have the instructions for exactly where to sell and exactly where to make your next purchase.
NO Studying complex trading systems!
NO watching the computer screen for endless hours!
NO emotions or guessing when to get out!
NO waiting for faxes or emails, so that you don't miss a trade!
MainScale™ APS™ provides you with all the instructions well in advance with exactly where to buy and sell each stock recommended.
Automated Profit System™ (APS™)
We show you how to place your orders so that they stay at the price you want for as long as you want. You can be out all day long in meetings, maybe golfing or even relaxing on the beach and the market's movements will make you money from the orders you placed the night, day or even weeks before.
WE ARE SO CONFIDENT IN THE MainScale™ APS™ STRATEGY that if you invest in at least 5 of our recommended stocks and place the orders just as the strategy instructs and do NOT generate enough profits to pay for your subscription AND dinner to celebrate your profits with a friend, we will refund your money!
Guaranteed!
SUBSCRIBE NOW!
"I've been using MainScale for 17 weeks now and it's an amazing system for investing. An automatic, disciplined way to buy into weakness and sell into strength. Those counter-productive human emotions of fear and greed have been removed from my investment decisions…the only emotion I have now in investing is satisfaction of seeing consistent positive weekly returns. My portfolio has gained an average of 1.13% per week over the last 17 weeks" RANDY
A TRADING SYSTEM IS KEY
Most investment newsletters I have received over the years typically rely on one person picking a stock that you hope is a winner: the "Home Run" approach. I'm sure you have received these newsletters touting a pick up over 100% or a service that you have to be sitting at your desk waiting to receive. It never failed that when the email or fax crucial to my investment came through, I would be out of the office and miss the entry point to buy or the proper place to sell. This is one investment newsletter that delivers, and is operated with Integrity.
CONSISTENT, PREDICTABLE PROFITS DAY IN & DAY OUT!
The MainScale™ APS™ Automated Trading System gives you in advance each stock to buy for the month; and the price to begin buying each stock. Once a stock is purchased you have the instructions for exactly where to sell and exactly where to make your next purchase.
NO Studying complex trading systems!
NO watching the computer screen for endless hours!
NO emotions or guessing when to get out!
NO waiting for faxes or emails, so that you don't miss a trade!
MainScale™ APS™ provides you with all the instructions well in advance with exactly where to buy and sell each stock recommended.
Automated Profit System™ (APS™)
We show you how to place your orders so that they stay at the price you want for as long as you want. You can be out all day long in meetings, maybe golfing or even relaxing on the beach and the market's movements will make you money from the orders you placed the night, day or even weeks before.
Tuesday, December 20, 2005
Common Sense Stock Trading Tips - More here
It helps to be able to keep track of what is going on in the stock market from day to day, and to understand the various stock trading systems that people use when investing, such as day trading, swing trading and scale trading. Most investment newsletters focus on one of theses.
Scale Trading is a disciplined, mechanical approach to buying low and selling high. It is based on the economic law of Supply and Demand, built on the premise that a physical commodity has
an intrinsic value and, therefore, will not likely become valueless.
The "what works" for the Scale Trading approach is that we can outline our trading plan ahead of time by carefully evaluating current supply/demand statistics and then comparing those
with the commodity's historical price range. This gives us the ability to then pinpoint the price at which we want to begin our scale down buying and, most importantly, calculate the total capital we will likely need to maintain that scale under our worst case scenario. In addition to patience and money, here is the combination you need for scale trading:
Physical commodities only - something that is grown or mined and is consumed, therefore subject to supply and demand forces.
Historically low prices - you can determine that several ways but basically all you have to do is look at a long-term price chart for the last 20-25 years and divide the price range from low to high in thirds. A market in the lower third is a candidate for scale trading although you may not want to implement such a plan unless prices fall into, say, the bottom 10% of the total range
or a more recent range of, say, the last 10-15 years.
Swing Trading: A style of trading that attempts to capture gains in a stock within one to four days. To find situations in which a stock has this extraordinary potential to move in such a short time frame, the trader must act quickly. This is mainly used by at-home and day traders. Large institutions trade in sizes too big to move in and out of stocks quickly. The individual trader is able to exploit the short-term stock movements without the competition of major traders.
Swing traders use technical analysis to look for stocks with short-term price momentum. These traders aren't interested in the fundamental or intrinsic value of stocks but rather in their price trends and patterns. Swing Trading requires that pay close attention every day to all stocks.
Day Trading: Day traders rapidly buy and sell stocks throughout the day in the hope that their stocks will continue climbing or falling in value for the seconds to minutes they own the stock, allowing them to lock in quick profits. Day trading is extremely risky and can result in substantial financial losses in a very short period of time. If you are a day trader, or are thinking about day trading, read our publication, Day Trading: Your Dollars at Risk. We also have warnings and tips about online trading and day trading.
Day Trading for a Living
There are two primary divisions of professional day traders: those who work alone and/or those who work for a larger institution.
Most day traders who trade for a living work for a large institution. The fact is these people have access to things individual traders could only dream of: a direct line to a dealing desk, large amounts of capital and leverage, expensive analytical software and much more. These traders are typically the ones looking for easy profits that can be made from arbitrage opportunities and news events. The resources to which they have access allow them to capitalize on these less
risky day trades before individual traders can react.
Many people attracted to the "Get rich Quick" theory of investing jump too quickly into one of the stock trading systems defined above. Being willing to stay in for the long haul sometimes is the common sense approach, but if you are planing to go one of these directions, it is all about
"doing your homework". Our stock market investment newsletter, The Common Sense Investor, will help you make decisions that will provide for a more profitable future.
Lets see what the new year will bring! Our investment newsletter
will add tips throughout the year.
Have a Profitable 2006,
Marc BarhonovichEditor
The Common Sense
Investor
Tuesday, December 13, 2005
Hot Trading Tips and Common Sense!
What are they saying:
When everybody is running around saying how great a stock is, then everybody who can buy probably already has, and the only direction for the stock to go at that point is down. When it is obvious and exciting to everyone, it's too late.
Class in session:
It does not pay to argue with the market. Experience teaches that fighting the market can be a very expensive lesson.
When everybody is running around saying how great a stock is, then everybody who can buy probably already has, and the only direction for the stock to go at that point is down. When it is obvious and exciting to everyone, it's too late.
Class in session:
It does not pay to argue with the market. Experience teaches that fighting the market can be a very expensive lesson.
Market index:
Buy when market indexes are in an uptrend. This reduces your risk on the long side and improves the longevity of bullish moves in the stocks that you own.
Know the rules...It just makes COMMON SENSE!
When shorting, keep in mind that if a stock pays a dividend while you are holding a short position, you must pay back that dividend. Most investors are unaware of this simple fact but it makes complete sense. You are borrowing the stock and any dividend payment should be owed to the "actual owner" of the stock. This rule can mean the difference between profit and loss.
When inflation is a concern, gold stocks tend to do very well. So, when inflation is on the move, look to the golds for golden profits.
How long should it be?
A cup and handle base should be at least six to eight weeks in length, starting with the first week closing down off the stock's top. What a great formation to trade!
Follow through day ...
When you get a follow-through day, signaling that the market is beginning a new uptrend, the vast majority of investors simply do not believe it's for real. They are scared to death and are so busy licking their wounds from all negatively of a downtrend they they are conditioned to doubt and be afraid of every rally. Many of the best bull runs start out this way.
Trend is your friend:
The trend is your friend. Position your trades based on the market's overall direction. It just makes COMMON SENSE!
Faulty distribution..
If the market logs three to five ditribution days, and most of these days show an index price spread from the high to the low of the day that is very small, and the amount of the actual price decline from the prior day is also very small, even though there is a volume increase and the price closes down, the movement is not significant. These types of distribution days may not be enough to cause the market to turn down.
Accumulation
The average investor, stockbroker, or academic never takes the time to check or learn to read a chart properly or, due to disbelief or pure ignorance, does not understand how important it is to be able to spot volume accumulation or distribution in a chart pattern. This is like a doctor never taking blood tests or x-rays to see what is actually going on with a patient's health.
MIstakes:
Plot out your mistakes on charts, study them, and write some additional rules in order to correct your mistakes andthe actions that cost you money.
Just like a good boy scout…BE PREPARED. A day of reckoning is coming and if we are ready… major profits will follow. Class dismissed...It just makes COMMON SENSE!
Have a profitable day,
MARC BARHONOVICH
Friday, December 09, 2005
How you can tell if ANY online newsletter or Investment System is a Scam.
The FBI and SEC have tons of warnings posted about scams on the internet. Whether email scams of things for sale that have no value, there are ways to VET any site and avoid being had.. but good.
Take these simple steps before any interaction you are not sure of on the Internet, especially when having anything to do with investment newsletters or investing systems.
FIND OUT IF THERE ARE ANY LEGAL ACTIONS AGAINST THE COMPANY.
The Common Sense investor has never been involved in any legal actions.
CHECK WITH THE BETTER BUSINESS BUREAU FOR COMPLAINTS AGAINST THE COMPANY
The Common Sense Investor and Mainscale.com are in good standing with the BBB
Check with the SEC or your state securities regulator to see if the newsletter has ever been in trouble.
The FBI and SEC have tons of warnings posted about scams on the internet. Whether email scams of things for sale that have no value, there are ways to VET any site and avoid being had.. but good.
Take these simple steps before any interaction you are not sure of on the Internet, especially when having anything to do with investment newsletters or investing systems.
- IF YOU CANNOT FIND A PHONE NUMBER OR A PHYSICAL ADDRESS ON A WEBSITE, NEVER DO BUSINESS WITH THAT COMPANY.
ANY HONEST COMPANY WILL HAVE A PERSON AT THE END OF THE PHONE WHEN NEEDED, AND IS NOT AFRAID TO GIVE OUT THEIR ADDRESS. - DO A WEB "EGO" SEARCH THE NEWSLETTER (or any company)
This will provide everything posted about them on Google, good or bad. Try It!
Search Google for "THECOMMONSENSEINVESTOR" for instance include the quotes. Try it on other any company.
The Common Sense investor has never been involved in any legal actions.
The Common Sense Investor and Mainscale.com are in good standing with the BBB
Check with the SEC or your state securities regulator to see if the newsletter has ever been in trouble.
Whenever the SEC sues a newsletter or stock promoter, we issue a "litigation release" and post it on our web site. Check the Enforcement Division's home page to see whether we've brought action against a newsletter or stock promoter who's touting a stock. You can also search
the SEC's non-EDGAR database for this information.
Your state securities regulator, which can be found at the website of the North American Securities Administrators Association, can tell you whether the broker pushing the stock or the broker's firm has a disciplinary history by checking the Central Registration Depository (CRD). To check the disciplinary history of the broker or firm that's touting the stock, use NASD's BrokerCheck website, or call NASD's BrokerCheck Program hotline at (800) 289-9999.
MORE INFORMATION ON SAFE INVESTING AND INVESTMENT SYSTEMS HERETuesday, December 06, 2005
Here are the various types of trades recommended by Marc Barhonovich
read more at: TheCommonSenseInvestor.com
No Brainers
A No Brainer is basically a screaming buy. Given a company's fundamental analysis, news reports, and the market in general, it has quick profit potential with minimal risk. No Brainers do not stay down for long, so make sure to monitor the site and your email box for common sense recommendations. They should be part of any investment system.
Low Priced Gems
Even if most of your portfolio is blue chips and mutual funds, you can boost your overall return, without taking on outrageous risks by adding a few of our Low Priced Gems to your holdings. You will be amazed to see how many quality companies that trade at $5.00 or less. Our investment newsletters always keep you informed about these.
Wall Street analysts tend to ignore smaller cap stocks because they have a vested interest in holding the shares of the larger corporations they finance. Low Priced Gems are what legendary investor Peter Lynch and John Templeton looked for -that have great potential but had not yet been recognized by Wall Street analysts. It is just common sense.
Long Term Buys
Through our plethora of stock analysis tools, we are constantly identifying long term opportunities. Leaving money in a CD may not even cover the cost of inflation anymore. Beating the markets consistently, over the long term, requires in-depth knowledge and timing. Making your money work for you is the basis behind each one of our long term stock recommendations. Mr. Barhonovich and his team of experts will recommend long term buys that just make sense. Check the investment newsletter for in depth information about these stocks.
Dividend Plus
Dividend paying stocks are becoming more and more popular ever since President Bush cut taxes on most dividends to 15%. Many investors like the idea of investing with the goal of producing income, or at least investing in less volatile, dividend-paying companies. After all, a common goal of virtually every investor is to one day go from supporting his portfolio to having that portfolio support him.
Breaking Out
Right at this moment, leading stocks are nearing their most explosive periods, but until now, only a few market technicians were able to profit from this knowledge. Now, you can too! The Common Sense Investor tracks the stock charts of the market's top-performing companies, looking for a select number of stocks with the most explosive breakout potential! We track quality stocks for chart patterns which often precede the biggest stock moves! These include time-tested chart patterns like cup-with-handle, flat double bottoms, head shoulders, and others that you will come to recognize. Common Sense recommendations with big move potential. Any investment system that ignores these stocks is preventing you from "Getting in at the right time". Authors of many investment newsletters do not have the expertise and experience to notice these in time to act.
Insider Buys
If insiders are buying their stock, shouldn't you be buying?
The "insiders" are the officers or board members that are running the company. They obviously know more about their company than we do. If insiders are buying shares in their own company, they usually know something that normal investors do not. They buy because they see a merger, acquisition or great earnings ahead or simply because they think their stock is undervalued.
Peter Lynch, the former manager of the Magellan Fund, has noted that insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise. That is why we really believe that following the insider's path can lead you to enormous profits in the stock market. Common Sense information leads to common sense profits.
Follow the GapGaps are good. It is a proven fact that many companies which "gap open" with high levels of volume, continue upward. Lack of supply and a sharp increase in demand sure can move a stock. Simple indicators can give buy signals when this happens. Since timing is crucial with gap stocks, we will send you an immediate alert with instructions for easy profits. Let over 20 years of in-the-market-experience advise your portfolio.
Going Short
Believe it or not, make money if the stock goes down? You can actually profit as a stock drops…and it is easy. In most cases, a stock, regardless of what country or market you are trading in, drops faster than it rises. You can capitalize on that negativity by shorting the stock, anticipating the stock will drop. There are so many stocks that drop in price, due to lack of profitability, slowing company growth, bad press, market makers, lack of capital, no investor awareness, plus so much more!
Wouldn't it be nice to make money when a stock goes DOWN? That's exactly what can happen if you're a subscriber to the Common Sense Investor. We tell you how to best take advantage of the "other side" of the market, and the stocks we think you should be selling in your portfolio, not buying.
That's right, selling. And if you "go long," in the belief that stock prices will appreciate is your only strategy, it could be costing you money. Opportunities always exist when it comes to shorting stocks, in the belief that stock prices will fall. That is why we created the going short recommendations made available only to Common Sense Investor subscribers. Hedge funds can do it and so can you.
Others
There are many other profitable investment opportunities that come available that may not fit into our main categories. We still want to make sure you aware of the potential.
· International Stocks· Closed End Funds· ADR'S· Gold Stocks
These are just a few examples of the types of positions that will show up in this category. Keep a close eye for alerts from our research staff because the profit opportunities are endless. The common sense approach to investment systems cannot afford to ignore these stocks.
Friday, August 12, 2005
Marc Barhonovich is a 20 year Wall Street veteran, private investor, and entrepreneur. With a degree in Banking and Finance, Marc served as Vice President of Investment for more than 13 years with Shearson Lehman and Dean Witter. During his career as a stock broker he managed more than 50 million in client assets.
During the mid-1990's Marc left the retail brokerage industry and founded his own investment banking firm. The firm was established to assist companies in business development, advice of funding strategies, as well as accessing the public markets. During the last 8 years he has consulted numerous public companies during development and growth stages.
Marc is Founder/Director of Investor Communication Corporation (www.iccinc.biz). The firm provides turn-key investor relations for small and mid-size public companies. Marc has served on the Board of Directors of two medical start ups and was CEO and President of a publicly traded internet company.
Well-schooled in public markets, technical analysis, and a broad-spectrum of investment systems, Mr. Barhonovich has developed one of the easiest and low risk investment systems available today. The MainScale Automated Profit System (http://www.mainscale.com/) is currently Wall Street's only scale trading investment newsletter for stocks.The MainScale APS investment newsletter has been published monthly since October 2002. Marc is also Editor of the recently launched investment newsletter, "The Common Sense Investor". The newsletter educates investors about his proprietary market analysis, enabling anyone to identify stocks with explosive upside potential and can be found at http://www.thecommonsenseinvestor.com/ . Marc is founder and director of the Capital Advisory Group LLC. He established the firm to provide market research, investment strategy, and trading systems to individual investors and institutions. To learn more about Marc Barhonovich and his excellent articles on investing, visit his BLOG. (http://www.commonsenseinvestornews.com/) and his new Google BLOG at http://www.thecommonsenseinvestor.blogspot.com/.
You can also find Marc’s market commentary and investment recommendations on his weekly Internet broadcast found at http://www.streetcast.tv/ and also carried by America One cable. Marc has also recently developed a fun and educational game for investors. Want to test your investment skills while winning prizes and having fun? Check out Wall Street Texas Holdem at http://www.wallstreettexasholdem.com/.
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