Archive for the ‘Stock Articles’ Category

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Stock Picks

Posted on February 3rd, 2012 by admin

If you are an avid late night TV viewer you’re probably used to seeing a lot of infomercials promoting ways to get rich and make it on Easy Street. If you are patrolling the Internet you’ll see the same thing. One area that often gets saturated every few years is the guy who will teach you how to make winning stock picks 100% of the time. Stock picks refer to the act of buying a stock or sometimes selling a stock to make a profit on the other end of the deal.

The new folks who come on the scene are usually armed with some study or course that they learned that will guarantee them a foolproof system for stock picking that will make them rich in a couple of months. I’ll let you in on a secret that no one else will tell you. There is no magic system; there never was and probably never will be. That does not mean that cannot get rich and find Easy Street one day; you will have to work hard like the rest of us to do it. The process is part Einstein and part Picasso. The good traders and investors don’t simply rely on guesswork, they pay close attention to the trends and moving averages among other factors.

You cannot always determine what a stock price will do because the market is like a big river with lots of things going on it. In some spots it is fast flowing while it is placid and calm in other spots. External factors such as the weather, politics, and environmental shifts including of course supply and demand can influence prices every second, hour or day of trading. For the novice day trader, making stock picks offer a chance to ride a quickly moving stock in either buy or sell mode. Of course that means including a margin of error to buffer any calculations they may have constructed.

The long term investor has done the heavy lifting by investigating the stock, the company the fundamentals of the prospectus and looked at the 52 day moving averages to establish a time to get into the market. The stock will be held until the investor is ready to sell to take a profit. That may be weeks, months or years depending on their strategy and the movement of the stock. Their process is very different when it comes to stock picks than a day trader.

There are thousands of stocks to choose from each day and many day traders have taken the time to develop a strategy that suits their style of speculation. Many will study charts extensively the night before to determine which companies will be chosen to tag in the morning. They may choose their stock picks from hot tips and previous buy orders suggested by analysts. They might be watching the news and realize that certain commodities were coming into play due to external influences. Everyone who works the boards has a system that they have developed.

Whether a trader finds a few good stock picks while scanning the forums or from his email newsletter that is predicting a dramatic shift in a particular sector, traders often start by checking things out. The mark of a good stock pick is related to the amount of information you can obtain from the company and the news analysts. By defining a few parameters, it is not hard to find good intra-day stock picks to keep you going.

Start by figuring out a few trading or inventing objectives. For example do you want to earn a certain amount of money from trading each month and how do you intend to manage your finances in order to achieve our income goals? What kind of trader or investor are you? Are you patient, impetuous, and easily spooked when things go bad? Can you handle making a large sum of money and then losing a large sum instead? How are you at money management? These factors are just as important as learning about moving averages, PE ratios and relative strength. Once you have figured out your style of trading take a look at some of the statistics that analysts regularly record. You don’t have to use all the data for your selection but it helps to understand the most widely used metrics.

Price/Earnings ratio – this is the measurement of how efficiently a company generates profits with its assets.
ROE – Often the most often cited measurement is the Return on Equity which is the net income divided by the book value.
Relative strength – this is the measurement of the share price of the stock’s performance against the overall market.
Dividends – When you buy a stock that returns a portion of its profits on a regular basis to its shareholders that is called the dividend. Companies that share the profits can return a good monthly or quarterly income if you own a sizeable portfolio of shares.
Cash flow – when a company offers its annual report there is usually a lot of information to review. One line that sticks out is the cash flow forecast. How much money does the company actually has to pay bills and take care of business without resorting to borrowing or selling more stock? Pay close attention to these numbers if you are a dividend investor.
Earnings growth – The stock analysts usually report earnings growth predictions for their closely followed stock picks. This usually covers advance forecasts for fiscal quarters or in some case annual earnings.
Recent earnings surprises – this is the difference between the earnings forecasts and reported earnings. This is the part we hear about when the company beats or comes in below earning expectations.
52 week highs and lows – This is the spread often shown of the stock’s momentum over a 52 week period. The chart clearly shows the volatility or lack thereof for given stock picks.

You can make a lot in the market and of course you can lose your shirt. The key to making and keeping your money over the long run is not how smart you are at stock picks but how well you manage risk. If you are into chart patterns, you can pick stocks that offer a simple ratio that allows you to clearly see when to get in and when to get out of the market. Easy Street is just around the corner if you know what to look for. That is the real value of smart stock picks.

NASDAQ Stocks

Posted on February 3rd, 2012 by admin

If you have ventured into the stock market through your 401(k) or retirement plan and now have a desire to dig into the trenches you may want to take a look at NASDAQ stocks. Buying and selling stock is major challenge for many people. Let’s take a look at how a stock exchange works.

One of the most well-known exchanges in America is the National Association of Securities Dealers Automated Quotations; better known as NASDAQ. This exchange is currently the largest electronic screen based equity securities market in the USA. There are approximately 3700 companies involved and has more trading volume than any other stock exchange on the globe. When you watch the cable shows the camera will often turn to the trading floor to capture the excitement and illustrate the frantic feeling in the pits. If they’re filming in New York, chances are you’re watching the traders covering the NASDAQ board.

The reason for all the excitement is that NASDAQ stocks are younger, more volatile and more flexible in movement than the stodgy Dow Jones average or S&P 500 index. Unlike the 32 large multinational corporations featured in the Dow, or the 500 large-cap stocks featured in the S&P, NASDAQ stocks cover a wide range of companies that are constantly on the move. The NASDAQ also was the first major exchange with a fully computerized system of operation. They serve as the operating model for new exchanges around the world.

They have an intricate network of highly secure computer systems that handle the exchange of stocks between buyers and sellers each business day. They are responsible for setting the prices upon opening and closing of their exchange from Monday through Friday. Companies pay a fee to become part of the NASDAQ stocks and must qualify by holding a certain amount of equity in their company. When a company desires to go public it must choose the exchange that will be listed. This is where it will sell its shares to the public.

When investors are trading NASDAQ stocks they know that there is a higher risk and reward profile because of the volatility of these younger companies on the exchange. Corporations represented by NASDAQ are more likely to be the mid-cap, small and some micro-cap companies rather than the stodgier large-cap enterprises represented by the S&P 500 and the Dow. Of course, where there is greater risk there is also a greater chance of return on the smaller investment.

For example within a 52-week period a small-cap stock may go from seven dollars per share to $21 per share. A large-cap stock is more likely to move from $320 per share to $324 per share over a 52-week period. Not only is the entry fee into NASDAQ stocks less exorbitant, a trader can diversify their portfolio much more easily while still taking advantage of the moving averages. Small-cap stocks offer greater opportunity for a 300% return on investment than large-cap stocks will on average.

Because of the higher price variation of NASDAQ stocks it is very important to know what you’re doing in this market. Greater price variation means volatility which can bring you lots of money in return if you’re on the right side of the trend. If you’re on the wrong side of the trend this is a very quick way to lose your shirt. This is especially true if you’re shorting the market whereby you are borrowing the stock on the high-end to sell the stock when it falls in order to pocket the difference. Short-selling can be enormously profitable but extremely risky if you don’t understand volatility and moving averages.

Many day traders find NASDAQ stocks to be extremely profitable because they are able to time their entry and exit points in the market the way a champion surfer catches a wave. Unlike the buy and hold investor who purchases stock over extended period, a scalper takes their profits quickly as the market turns. A day trader may be entering the market and exiting within minutes based on volatility, predetermined exit and entry points or stop loss order.

If you know what you’re doing and have a strong stomach for this kind of volatility you can make very good profit because the risks of this market do limit the number of investors and traders who participate on a regular basis. You can trade the index fund rather than individual stocks as well. You can trade the NASDAQ index; (QQQQ) which comprises the largest 100 stocks on the board. Some traders watch the moving average of the index when looking for trends or price movements.

Many investors and traders will develop vague charts and other technical tools to evaluate the moving average. They will use historical data to calculate the various patterns associated with a stock or even the index. You can calculate the moving average by the average price of the most current 52 days closing price or 200 days closing price. One rule of thumb dictates buying NASDAQ stocks when they are above moving average and sell when they are below the 200 day or 52 day moving average.

The highest percentage of volatility for NASDAQ stocks occur in the early morning at the opening and in the afternoon before the closing bell. This is where most people expect to get the best prices on the market. The spread between bid and ask price can widen significantly during the day before everything settles down.

There are a few things that you must evaluate before you enter the NASDAQ stocks as a trader or investor. Many successful people fail miserably at trading because they are used to basing their success on their ability to control their environment. Give up any thoughts of manipulating or controlling the NASDAQ stock market right now. Your chances of doing so are about equal to stopping a tsunami with a beach bucket. To return to the surfer analogy, you may be able to ride the wave successfully as long as you acknowledge your relationship to it. Develop your trading rules and follow them faithfully. Develop extraordinary skills at money management and risk management; once you have developed these three distinctions you have a very good chance at making it in NASDAQ stocks.

Gold Stocks

Posted on February 3rd, 2012 by admin

As one of the most precious metals in the world, gold has been a subject of fascination and a symbol of wealth for majority. And with the economy facing a constant threat of turmoil and instability – manifested in the depreciation of dollar’s value – many people are enticed to invest in gold stocks for they provide stability due to their significant price rise over time.

History will tell us that gold plays a very important role in the finance and investment. In fact, it is viewed as a currency rather than a commodity. Gold’s role in central banking reserves, low correlation with other commodity prices, and its pricing in relation to fiat currencies during the late 2000’s financial crisis are indeed a proof of its strong influence.

It is a fact that in investing, “earnings” are everything. They can make or break one’s company. Earnings are the ultimate driver of a company’s long-term stock price. With this, more and more investors go for gold stocks for these are much secure and are subject for better earnings. Most especially that dollar, being the medium of international transactions, has been stripped off of its gold backing.

The market clearing price of gold is set in London twice a day. This is referred to as the London fixing price. It is also called the international bench mark price and a set in dollars (US) per fine troy ounce. A fine troy ounce is equal to 31.1035 grams. You can calculate the cost of a gram of gold by dividing the US dollar price for one Troy ounce by 31. 1035.

Every few decades there is talk about returning to a gold standard especially during shaky economic times. This is an impractical option because gold is finite and rare. Gold production continues to lag in relation to the world’s economies and is actually declining in output. Gold reserves and their trading market is a small fraction of the trading market today. The fiat currency and fractional life banking system has proved to be both flexible and durable as a monetary standard. Switzerland was the last to give in in 1999 when he joined the international monetary fund and dispensed with its hybrid gold standard.

There are indeed a few different ways to profit from the value of gold without actually owning it. Gold bars or gold coins are available at a few financial dealers but there are insurance and storage costs associated with owning the metal. The fluctuating prices of gold against the dollar make buying and selling the real thing cumbersome at best. Gold stocks allow you the opportunity to invest in gold with less expensive ratios without having to worry about insurance and storage costs.

How to invest in gold stock

Investing in gold, either in stocks or the physical gold itself (coins and bars) is like any other investment. It requires the right knowledge about the movement of the market, prices and competition.

If ever you have decided to pursue in investing in gold stocks, you have to consider a few factors such as your tax and your risk aversion. When buying gold stocks, tax issues are anticipated to come up. However, buying gold coins and bars and keeping them away will eliminate such problems.

Others consider gold coins than stocks or gold bars. It’s easy to buy coins at the lowest premium. These are usually the ounce coins: the American Gold Eagle, the Canadian Gold Maple Leaf, and the South African Krugerrand. Physical gold, on the other hand, needs to be securely stored. Many companies and banks allow storing for a nominal fee. These must be kept in mind for they will add expense over time.

If you don’t want to undergo all the hassles of taxes, insurance and storage, you could always buy shares of one of several gold ETFs. Aside from the low commission, there are no storage charges and they are SIPC protected.

In gold stock investment, seek out stocks from companies with an established deposit of gold. The safest would be those who operate gold mines on their own. In addition, don’t lay it all in one investment. Have at least 5 gold-related stocks. Just in case one company stumbles, you still have other stocks to raise your investment.

Gold mining Industry: Best investment for gold stocks

Gold mining industry is indeed unique. Miners’ current production becomes more profitable as gold price increases. This justifies a higher stock price.

The soon-to-be gold (reserves under the ground) is also profitable since most reserves are ten times that of the current annual production rate. And with the miners still producing every day, there is no way, you will lose value.

Unlike the vast differences in valuation between one stock and another, gold is gold. The companies do not spend 15 to 20% of their annual revenues promoting the unique selling proposition of their particular mine or the quality of their production procedures. An ounce of gold in one part of the world has the same valuation as an ounce of gold on the opposite end of the globe. Companies mining gold through independent operations worldwide number over 50,000, at this point. As an investor you can actually have it both ways; you can invest in the company that mines the gold and hedge your investment with their production output.

The metal is currently mined principally for the jewelry industry where over 80% of all newly mined gold is accumulated. That amounts to about 1000 tons of gold per year. The mineral can also be found in appliances for dentistry and medicine as well as coins and medallions. The electroplating industry uses a considerable amount of gold in its manufacturing process as well. This ubiquitous metal continues to find application in a variety of industrial markets as well as the creative arts.

At this point in time all the gold that has been refined in the world amounts to 150,000 tons. We may see gold in a variety of forms all the time but it is still a rare metal. A 1 ounce gold nugget is actually harder to find than a five carat diamond.

Above all of these, it must be borne in mind that gold stocks are not a sure way to hedge against the economy. Although it is not as vulnerable as any other stock, it must be looked after carefully and managed with the right knowledge and wise attitude.

Exponential Moving Average

Posted on February 3rd, 2012 by admin

It is a known fact that investing is never as easy as they show in the movies or TV. From a constant check with the news reports, stock quotes, weather channel and current events which show the general trend of the market, most traders base their trading decisions directly on how the price act on a particular stock. This is one of the important factors that majority of the traders keep in mind; and one of the ways to have the price movement calculated is through the Exponential Moving Average (EMA).

The Exponential Moving Average is defined as a technical analysis that helps show the trend of a stock. It serves the purpose of weighing current prices more heavily than the past prices – giving it the advantage of being quicker to respond to price fluctuations compared to that of a simple moving average. However, most investors regard this as a disadvantage since the stock market or the business world in general is unpredictable at times. With this the EMA is more prone to false signals.

One cannot really grasp the idea of Exponential Moving Average without defining and contrasting it to a Simple Moving Average. The latter is the line that is plotted directly on a stock chart which represents the average closing cost of the stock over a fixed amount of trading days. In example, a 15-day SMA is the average closing price over the last 15 days.

It is calculated by adding all the prices from the first day up to the fifteenth and then divided by the number of days which is 15. Plainly put, the SMA is just an arithmetic mean. The key is to always add the closing prices of the consecutive days and have the sum divided to the number of days. This is where the need for EMA computation arises. Since the SMA is a lagging indicator, most traders prefer to use the Exponential Moving Average for it can increase the sensitivity of the indicator.

Here are some important principles to keep in mind when applying moving averages:

• A moving average is always presented by a curved trend line. Since moving averages are lagging, they provide support and resistance.

• A strong signal exists when the stock price is above an upward-sloping moving average. A bearish is dominant if the stock price is below a downward-sloping moving average. In the event you are using quite a few moving averages on a chart, then its bullish if for example the shorter moving average is above the longer one and the share price is above both moving averages.

• Always keep eye on the slopes of the moving average. An upward-sloping moving average is stronger than that of sloping sideways; a downward-sloping moving average, on the other hand, is stronger than that of moving sideways.

• Apply moving averages which will allow you to analyze the chart in the short, intermediate and primary time frames. The usual choices for others are 4 and 9-day (short term); 20, 30 and 50-day (intermediate term); and 150, 200-day (long term)

• Both SMA and EMA will often give similar readings. To use the one you are at ease with is always the most effective practice. But don’t forget to use that method consistently. After all, there is no method considered as completely “right” and “appropriate” between the two.

• The MA are strongly aligned if almost all (if not all) is above one another and price is above all of them. They are in bearish alignment when the reverse is true.

From the name itself, the EMA is considered to be more complex than a simple moving average. But again, most traders deem it as superior than the other.

How to Calculate Exponential Moving Average (EMA)

EMA is a trend following indicator that is calculated with the following formula:

EMA = Price(t) * k + EMA(y) * (1 – k)

[Where: t = today, y = yesterday, N = number of days in EMA, k = 2/(N+1)]

First you have to determine the period of the EMA that you would like to calculate. The usual periods calculated by traders are the 10-day, 20-day, 50-day, and 100-day EMA. You can then proceed with the calculation using the formula above.

For instance if we are calculating a 20-day EMA, we’ll start by calculating the k for the given timeframe: 2/ (20+1) = 0.09523. Add the closing prices for the first 20 days together and divide them by 20. After this, you are now ready to start getting the first EMA day by taking the following day’s (day 21) closing price multiplied by k, then multiplying the previous day’s moving average by (1-k) and then adding the two. These steps must be done consistently for each day that follows to get the full range of EMA. To make these calculations authentic, you can put it on an excel spreadsheet.

If you find that the calculations above complex, then that is not really a problem. Aside from the fact that you can have some experts to do it for you; you can make use of the internet in the computation of EMA. Yahoo!, being a powerful search engine and information site, offers traders this option in its “Finance” home page. Just hit Yahoo! Finance home page and enter the ticker symbol of the stock that is being evaluated. Click on the “GET QUOTES” button. You’ll be redirected to a new page. Go to “Historical Prices” link and then record the closing stock price across the previous number of trading days that represent the period you want to calculate.

However, another similar formula is offered here:

EMA = (P x Z) + {pEMA x (1 – Z)}

Compute the current day’s EMA using it. Remember that P = stock price, pEMA = previous day’s EMA, and N = number of periods.

Truly, determining moving averages are sure determinant of an investment’s success. However, every trader should weigh the advantages and disadvantages and decide in which manner they will be using moving averages.

Free Stock Quotes

Posted on February 3rd, 2012 by admin

Small corporations as well as multinationals pin a lot of their financial future on their overall value in the stock market. Traders and investors make their money from the movement of stocks and their position in the various markets. If you are looking to be a trader or an investor you will need to have access to up-to-the-minute information regarding the movement of your stocks or commodities. Stock quotes have an important role to play in the day-to-day monitoring of the markets movement. You can get free stock quotes from a variety of sources if you’re interested in tracking the progress of various companies.

The value of free stock quotes

It’s very important that you pay attention to your entry and exit points when it comes to obtaining free stock quotes. Some companies have a specific time delay and you should be well aware of that. Those who are simply using the ticker for training can use free stock quotes as a way of gauging their progress in the markets without worrying about actual profit and loss. If you are paper trading getting free stock quotes and news reports from online sources is a great way to gain experience.

Sources of free stock quotes

When I was growing up the best places to get free stock quotes was the daily newspaper. While other people were rushing to get to the sports section I headed to the long list of stock quotes buried in the business section of the New York Times. People still rely on the information provided by these newspapers even though there are more immediate ways of obtaining the information they need.

Radio stations usually offer a brief stock report at the top of the hour during their daily newscast. Of course you can’t depend on them to give you information on your particular stock since they’re more likely to broadcast the current state of the Dow or the S&P 500.

Keeping up with the news

Because the price of stocks fluctuates traditionally on supply and demand within their particular market, it is important to pay attention to the news. If you are investing or trading in certain commodities such as oil or grains is important to keep tabs on the global situation. For example South American and Middle East oil shipments are constantly being monitored and weighed against political stability. The weather will significantly influence crop production therefore it is important to be aware of the present and future forecasts as it relates to your industry’s commodity pricing.

Stock prices are influenced by other events and based on your profile you may need to track stocks on a minute by minute basis. Day traders will sit on a stock once they enter the market and watch it closely until they exit. They often pay a significant amount of money to ensure that their stock quotes are real time. Some trades may have an entrance and exit point within minutes of each other based on the fluctuation of the market. Investors who take a more long-term approach may use free stock quotes to keep an eye on their position. Their goals may not be dependent on the immediate fluctuation of prices.

The Internet has made the fortunes of many aspiring stock traders by virtue of the fact that they can take their mobile devices anywhere while still receiving up-to-the-minute reports. Free stock quotes are available on the Internet even in real-time. It is now possible to get all the information you need to stay ahead of the game simply by turning on your smart phone.

Brokers and online trading sites

Prominent websites that host financial news often have real-time free stock quotes available. Some websites even allow you to set alerts to specific stocks as a means of getting you back to their webpages on a regular basis. This is quite a smart strategy considering the number of individuals who either watch stocks because they have an investment to maintain or are learning about the stock market and practicing.

Many brokers’ sites offer free real-time stock tickers for their paying customers. They also offer free stock quotes through a delayed ticker. If you’re simply using the stock quotes as a way of measuring a company’s performance you probably aren’t pressed with the need to have up-to-the-minute accuracy. If however, you are shorting a stock in a highly volatile period, every second that you are in the market without real-time information could mean immense profit or crushing losses.

If you visit the office of a professional trader, it is not unusual to see several computer screens displaying various financial websites while another displays charts and graphs of stocks currently being traded. Special online radio stations will carry nothing but free stock quotes all day long. You just can’t wait for the evening news to get your free stock quotes when you are a day trader.

For the vast majority of people who are into stocks and bonds, the closing prices of the major indexes are all they really care to explore. If they participate in the market at all, they are known as retail investors. They usually pay very little attention to the daily fluctuations of the market and will do just fine getting their free stock quotes from the evening news.

Tracking your stocks over time

Long-term investors will keep tabs on their portfolio through free stock quotes online or even in print. Because they are invested in the long term, they’re less influenced by the day-to-day gyrations of their portfolio and only need to check their positions from time to time. They may rely on stock charts to determine their entry and exit points the way that day traders do but are usually looking for more stability and consistent returns.

Free stock quotes should never replace due diligence when it comes to learning about the specifics of the company you wish to invest in. The more you know about the prevailing situation surrounding an organization as well as its financials, the more prepared you will be to make a profitable decision. Keep in mind that reading free stock quotes or signing up for a website that provides free quotes does not automatically give you the option to trade stocks. You will need to sign up with a brokerage company or broker first. Take the time to learn all you can about investing and trading fundamentals before you begin to put real money into play. Make use of free stock quotes to become thoroughly familiar with the markets.

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