Over the last 5 years Investors411 has outperformed the benchmark S&P 500 and almost all major US indexes. For more on this see Overview section .
Chief Strategies
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AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING
Buy the Dips
- Investors411 uses the S&P 500 as an overall barometer for almost all of the recommended ETF’s & stocks except GLD.
- This is NOT your fathers buy and hold market . Under 8 years of Bush the Dow went from 11,000 to 8,000 and left a whole dung heap of economic problems. While stocks have recovered these problems have not been fixed.
- There are dozens of Indexes and Oscillators you can use to judge a dip. Investors 411 tries to KISS = Keep It Simple Stupid .
- Therefore 411 uses the McClellan Oscillator as a guide to buy and when to sell. Because its KISS and reasonably accurate in short and mid term trades/investments.
McClellan Oscillator
$NYMO (chart of shorter term) and $NYMO (2 year chart) The NY Stock Exchange McClellan (EOD) Index measures how much the NYSE is oversold or overbough . Basically
- Oversold conditions = (@ -60 ) = buy
- Overbought positions (@+60) = sell
The closer we get to +/- 60 the better our chances of making money by buying or selling. Markets simply runout of buyers when they get over extended in either direction. There is no 100% clear buy or sell signal at + or – 60. So its best to use these numbers as guideline.
Investors411 is focused on this index because it uses it as signal of when to add or subtract from ETF positions. The USA is still the biggest economic dog around and the MI reflects what happens to the New York Stock Exchange. When the NYSE is moving higher/lower other worldwide indexes follow
Two of you in different commments have summarized Investors411 main trading strategy for stocks. There are of course a zillion others. A few of which Investors411 uses.
The Critic:
“#1 The Lower the McClellan goes the better time it is to buy stocks.
#2 YOUR Stock List has stocks moving higher – The 50 day moving average is going up. This is the blue line on the chart.
#3 the time to buy is when these stock dip back down closer to their 50 day moving average.
#4 A time to sell is when the stock gets too high above that moving average?
#5 AS ALWAYS DO YOUR…”
Paul R
“When a good quality stock pauses to refresh and hangs out on the 50 day moving average (DMA) it can be a good time to buy, this point is known as “Free Parking”. If you are watching a stock in this situation and it starts moving up on higher than normal volume go for it!
When a stock is extended 30% from the 50 DMA be light on your toes. When the stock is extended 50% from the 50 DMA have your finger on the trigger. When a stock is extended 100% from the 200 DMA many institutional buyers (mutual funds etc) will lighten up on their position.”
Other Significant Charts/Indexes
Top Forecasting Tools – These tools are more usefull during diffent periods of time. At another time Investors411 might use something different.
- Volume
- How markets react to news
This is discussed daily in Investors411 Other significant forecasing indexes include
- BDI (3 year chart) - The Baltic Dry Index measures the flow of goods by price (world trade) . It is a good measure of how much China is buying. In May of 2008 it reached a high of 11,771 then by Dec of 2008 a low of 663. By early January it had risen to a high of 4291 then dipped and recovered to a higher high of 4643. It has since fallen to around 3000 at the start of 2010. Basically, - the better the flow of world trade the higher stocks (especially China) will go.
- $USD - The US Dollar Check out the 6 month chart (to the left) or a multi year chart of the US dollar of the US dollar . Mantra in recent years - Dollar up = US stocks down & Dollar down = US Stocks up Often this inverse correlation exists, Sometimes it does not. Any move over +/- 0.50% is significant .
AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING
