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SCOTT WELSH’S ANATOMY OF A GREAT TRADE The Power Of Staying With It (AVGO) Back in the early 2010s, Broadcom (AVGO) was just another semiconductor IPO. Semiconductors weren’t as hot then as they’ve definitely become now, but the IPO did okay. At least it didn’t fall off a cliff like many IPOs do. In August 2010, the 12-month simple moving average (SMA) finally printed for the first time on our chart. From there, instead of worrying about financials, market conditions, or pundit predictions, we simply waited for it to drop below the SMA and then give us two consecutive closes above the SMA. In March 2012, we finally got it. And it sputtered out. Guess what? IPOs do this all the time. Then we got another trigger in August 2012. Again, it moved back below the SMA for a loss. Maybe this method doesn’t work. I’ll just give it one more try… In July 2013, we got another trigger. And holy moly: ![]() It skyrocketed from $37.85 to $233.83. If we were able to take the first two stopouts of -14% and -10%, we were then treated to a 500% winner. And, by the way, AVGO has continued to produce winning trades, including a current one that would’ve entered at $565 in January 2023 (AVGO is currently trading at $836): ![]() Happy trading, Scott P.S. As a reminder, these historical lookbacks are based on my longer-term Weinstein Stage Analysis method. The charts above use monthly candles and a 12 month simple moving average. For details on this method, see my explanation on this Ask The Pros episode starting at timestamp 20:45. Additionally, the teal lines on the chart show the profitable runs. GUEST POST: TOM BUSBY The January Effect: A New Year's Gift for Traders? The stock market is like a vast ocean. It has waves and currents — and some of them can be predictable, if you know where to look. One predictable pattern is the "January Effect." This phenomenon suggests that stock prices, especially those of small-cap companies, tend to increase in January more than in any other month. Why Does It Happen? There are a few theories behind the January Effect. One popular explanation is tax-related. At the end of the year, investors might sell off stocks that have declined throughout the year to claim capital losses on their taxes. Once the new year begins, they reinvest in the market, causing prices to surge. Another theory relates to investor psychology. As the new year begins, investors might be more optimistic and willing to buy stocks, driving up prices. Additionally, year-end bonuses often get invested in the stock market in January, leading to increased buying pressure. Historically, the January Effect has been a boon for those who are aware of it. By anticipating this surge in stock prices, traders can position themselves to potentially reap the rewards. Of course, it requires careful consideration of the specific market circumstances going on in any particular year. There's another market window that savvy traders can exploit. I call it the "Discount Window." But unlike the January Effect, which can only give traders an edge once a year… The Discount Window opens up opportunities every single day! It’s based on a strange phenomenon that causes some stock prices to be artificially suppressed near the end of the trading day. I shared more details about this “Discount Window” with a small group of traders like yourself. If you’d like to hear more about it — including the research I’ve done showing how much these daily income opportunities could be worth… Click here to access the replay. Get ready to dive deep into the inner workings of the stock market and discover how to turn this daily into huge opportunities. Catch you on the flip side, — Tom Busby |
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