By: Tom Gentile
on April 26th, 2022
Right now, there is One Word for Stock Market Behavior
One word comes to mind when a view of the charts of the Dow Jones Industrial Average, the NASDAQ and or the S&P 500… and that word is Timber!!!!!!!!!!!
Meaning the stock market indices are falling like a lumberjack falls trees in a forest.
Take a look…
I am showing charts on the ETF that tracks the bigger index. DIA is an ETF that tracks the Dow, QQQ tracks the NASDAQ 100, SPY tracks the S&P500.
With all this downward price action is there a reason to go long ANY security?
If you still like to be long some stocks for whatever reason and you maybe aren’t that familiar or comfortable with going short stock or going long Put options, one thing to consider is finding stocks that are showing strength, (Relative Strength).
Stocks Showing Relative Strength
Relative Strength is a type of analysis used valuing one security over another. It is where one assesses how stocks or other investments have performed relative to the market as a whole or to a relevant benchmark.
For example, a relative strength investor would look at a security or batch of securities / sector to see if it is outperforming the Nasdaq Composite Index or S&P 500 index.
When a security is up a large percentage compares to the percentage that larger benchmark index is performing that shows the security has Relative Strength.
If you go with the adage from founder of the Investor Business Daily William J. O’Neil which is strength begets more strength (not that he is quoted as saying that, but his strategy of considering investments in stocks at or near their 52-week high is based on that premise as we understand it).
Stocks at or Near Their 52-Week High
My tools www.tomsoptiontools.com can scan for stock at a percentage of their 52-week high or low.
I like to look for stocks that are holding up well against an overall market drop.
This tells me they are holding up even though there is a bunch of selling going on in other securities and parts of the market.
This software is not meant to be used as a means to find recommendations on what to invest in or which options to trade.
It is, however, a research and analytics site.
When you run the scans or do your research you then are to work with your brokers / financial professionals to discuss suitability for your account.
App: Toms Option Tools
Toms Option Tools scan the markets for bullish and bearish trade opportunities using our proprietary scans and strategy algorithms. TTR Darknet finds bullish entries based on triple stack channel collisions. Money Calendar identifies seasonal patterns with at least 90% accuracy looking back 10 years. Weekly Cash Clock finds short term opportunities that last a week on average. Microcurrency Trader applies Darknet technology and moving averages to cryptocurrencies. Velocity Trader utilizes volume spike and Velocity indicators on custom stock lists. Quantum Scripts scans the markets for momentum acceleration signals and employs Quantum noise filters. Optimal Trader finds directional pre-earnings opportunities that are optimized for entry date, stock movement, and volatility surge. My Trades tracks the profit/loss of your trades, displays stock charts and risk graphs, creates new trades, and edits existing trades. Morning Report provides top 10 option rankings in 6 categories each day.
Stock and options trading has large potential rewards, but also large potential risk.
You must be aware of the risks and be willing to accept them in order to invest in the stock and options market. Do not trade with money you cannot afford to lose.
This is neither an offer to buy/sell/ or recommend a particular stock or option.
Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been actually executed, the results may have under or overcompensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with hindsight.
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