Stay in Step with the Market Recap: Daily vs. Weekly

This week our monthly Stay in Step with the Market webinar covered the current market, using daily vs. weekly charts, developing conviction, setting stops, and more. Here are the highlights:

 

Daily vs. Weekly Charts

The MarketSmith team always examines the weekly chart first, before moving on to the daily. It reduces the noise and volatility of the daily chart, so you can gain a better perspective on the stock’s performance over the longer term.  There is also some fundamental information exclusive to the weekly chart, such as a full eight quarters of earnings history, which is important to assess before buying a stock.The team then recommends switching to the daily chart to fine-tune your entry. A good rule of thumb is to can use the daily chart to buy stocks and the weekly chart to hold them.

Developing Conviction

The key to developing conviction in stocks is fundamental analysis. It’s important to really understand a company’s story and its core business. When you are applying your conviction to a sell scenario, it’s also essential to factor in your profit cushion and position size. You can remain convicted in a stock, but if the technicals are breaking down and you don’t have a profit cushion, or if the stock is taking the majority of your portfolio with it, better to sell all or a portion of your position and re-enter when the stock is acting well.

Setting stops

Setting stops frees you from having to watch your stocks all the time. With earnings season here, stocks are moving with increased volatility. If you do choose to hold a position through earnings, make sure you have your stops set well before the earnings announcement. This is a part of planning your trade, and trading your plan.

If you have any questions, you can reach us at (800) 424-9033 or at reachus@marketsmith.com.

Best Returns,

 

The MarketSmith Team