Not a subscriber? Click here to learn
more.
|
| Home | About Us | Resources | Archive | Free Reports | Market Window |
How We're Making "Big Money" in This MarketBy
Friday, December 5, 2014
Buying stocks is easy for most folks... You hear a great story or you see big upside potential and you hit the "buy" button.
Knowing when to sell – and when not to sell – that's the tricky part. It's what separates the average trader from the best in the world.
Many novice investors get excited about small profits and sell before the biggest gains... Or they "panic sell" when the market pulls back in a natural correction, only to watch shares rebound to new highs.
But if you stay focused on the big picture, you can avoid these problems... and set yourself up for big gains in the market today.
Let me explain...
Since our DailyWealth Trader newsletter launched in early 2012, we've kept a close eye on the "big picture" – the big trend in stocks.
I last checked in on the big picture in mid-October. The benchmark S&P 500 index had just dropped more than 7% in less than a month. The index was at a five-month low... and was nearly negative on the year.
The short-term chart did not look good...
 Here's what I told DailyWealth Trader readers at the time:
So we looked at the big picture... And here's what we saw:
 The big picture showed a series of "higher highs" and "higher lows" – each high peaks above the previous high... each low stops short of the previous low. That's classic bull market action. And it had more than doubled the market value of the S&P 500. While other folks were reading gloomy headlines and panicking, we understood that the big picture was still up... and the best place to make money was on the long side of the market.
Of course, we kept an eye on our protective stop losses... But we also took advantage of the selloff with more than a dozen trades over the next month.
It turns out, my "big picture" note came the day after the bottom of that low. And the October correction has reversed. The S&P 500 is up 11% since then... It just broke out to a new all-time high – more classic bull market action.
 Legendary trader Jesse Livermore said, "It was never my thinking that made big money for me. It was always my sitting. Got that? My sitting tight!" Livermore found a trend and stuck with it. He watched the big picture. That's just what we're doing in DailyWealth Trader... and you should too. Of course, there are lots of good reasons why stocks might fall from here. Stocks can't go straight up forever... Values aren't as good as they once were... And much of the world has slipped toward recession. If the market does turn, we're prepared with our catastrophe-prevention plan.
But don't forget... there are good reasons why stocks could continue higher. They're a long way from bubble valuations... the U.S. economy is still grinding higher... and most importantly, the public is still ambivalent about the idea of owning stocks. Sentiment is nowhere near the frenzy you usually see at the top.
And as long as the trend is in our favor, we're going to sit tight. As long as stocks are climbing and we're finding good opportunities to profit, we'll stick with the big picture. The big picture... the big trend... is UP. Stay long.
Good investing,
Amber Lee Mason
Further Reading:
Amber recently shared one of her favorite trades right now. "Emerging markets are hated," she writes. "And when they rebound from pessimism this deep, you can make big gains very quickly." Get the full story here.
She also shared her favorite long-term money-making idea. "If you don't take advantage of this idea, you can't call yourself an investor," she writes. Find out why she calls it "the ultimate money-making idea" here.
Market NotesA MONSTER RALLY IN AIRLINE STOCKS Since July, the price of crude oil is down more than 30%. This decline has killed oil stocks... but provided a big boost to a "bad to less bad" trade we profiled years ago.
Back in September 2011, we wrote a bullish note on airline stocks. Airlines sport razor-thin profit margins, they're subjected to wild swings in fuel costs, and they require lots of capital expenditures to keep the businesses running. This makes them horrible long-term investments. But from a trading viewpoint, it's worth noting that airlines go through big "boom and bust" cycles. These cycles can be traded for big profits.
In our write-up, we noted how airlines had just experienced a big bust. Many airline names, like Southwest Airlines, had lost 30%-40% of their value in just a few months. Sentiment toward the sector was awful. This, we speculated, was setting up a "bad to less bad" rally.
Just after our note, airlines stocks entered a huge, multiyear rally. Since fuel prices are a big cost for airlines, the decline in crude oil has boosted this rally. For example, major airline Southwest Airlines is up 48% since July... and up a stupendous 372% since our note. It's a heck of a bad to less bad rally.
 |
Recent Articles
|
