Beware Of Relying on Stock Technicals Alone

Good morning all,

Today I wanted to write a little about the dangers of relying on the technical aspects of stocks alone. 

While technical analysis is a wonderful tool in determining the strength of a stock, it is not the end all to cure all in finding stocks to invest in. 

Technical evaluations can have many hidden traps that pump and dump promoters place in there in an attempt to "dress" up whichever stock they are going to promote. Looking at price increases or decreases very rarely very accurate. Just because a stock finished the day at plus or minus a certain percentage doesnt mean it actually moved very well at all. To be clearer I have to actually look at the individual trades themselves and see the amounts that were bought or sold. Have you ever seen a big jump in a  penny or sub penny stock and then looked and saw that it was a 50 share buy? That all to often is a promoters attempt to lure you into a stock on price alone. They manipulate the price with little buys thinking you wont notice that it was a crapola buy because they totally think you are stupid. A 100% gain on a stock is not really a gain if it only had 1,000 shares in volume.  I say dig DEEPER. 

Pay attention to the time and sales as promoters will manipulate the stock at 4 common times. The first is at the close the day before a promotion begins. They will often try to manipulate the stock down so as to get what they dress up and call a "bounce" first thing in the morning. The second is first thing in the morning in order to try to get the stock to move so they can proclaim its gaining momentum therefore luring you into their trap while at the same time making themselves look good. Third is once the stock stalls and we should all know by now that stocks stall. They will put in little buys in order to try to attract attention to the stock  through percentage gains again creating another trap. The Fourth and in my book the most pathetic is the end of the day manipulation to save face because the promotion bombed. They will try to get an end of day percentage gain so that they can tout their followers with a look at what our "call" did today, It gained blah blah blah percentage. 

Technicals can totally help you avoid these situations if you dig deeper underneath the dressed up surface, and also check to see if a particular stock has been promoted recently and what the outcome of that promotion was.  

Until tomorrow, 

Ride Hard or Stay Home 

Investing in Bio Stocks

Investing in Bio stocks can be tricky at best. Never is it more important to do your due diligence than when looking into investing in a Bio stock. These stocks move very rapidly when they move and have extreme increases and decreases depending on the results of drug trial phases.


This is my opinion.... Bio stocks are risky and it takes a lot of guts to play them. 


If you dont have the stomach for them and dont yet have the ability to trade emotion free and be patient, then my suggestion is to stay away from Bio stocks. 


My approach to Bios is pretty simple as far as my entry is concerned. I of course look at the chart and get an idea of where the bottom is then I set my bid price. 
Ultimately I like to start playing the stocks in Phase 2 or later and 3 to 4 weeks ahead of completion of that trial. Having my postion maintained well ahead of the news of the results in the phase allows me to get out quicker once the stock begins to move. 


As far as a target gain percentage goes it just depends on how the stock moves. 
I watch the RSI continuously to determine the buying or selling pressure on the stock. Once I get a feel on the technicals of the stock then I determine my selling price based on that.


This is where it is so important to not trade on emotions as we can easily get caught up in wanting more once the stock gains momentum. Dont get GREEDY. That is a very important rule to insure not getting caught losing gains once the stock runs out of steam. These stocks move just as quickly on the way down as they do when they are screaming upward. 


 So in conclusion....... Do your DUE DILIGENCE and never take your eye off of the ball EVER