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Should Rolling Stocks be researched differently?
I believe when researching Rolling Stocks that we should focus more on the (1) technical aspects of a given stock's potential instead of its (2) fundamentals. If you haven't noticed or maybe I'm just reading the situation incorrectly, that it certainly seems to be a reoccurring theme for most of the apparently good Rolling Stocks to characteristically run on poor earnings, revenues and net profit margins. If we do find a good roller that does revel in a healthy financial situation, it probably is one that runs in excess very well beyond our preferred $25.00 a share maximum limit.
(1) The technical analysis of stocks: is the flip side of fundamental analysis. Technicians are analyst's that posit that buy and sell signals aren't seen in earnings reports, oil well discoveries and big sales contracts. Instead, these signals can be discerned from a stock's recent price moves, from its buy and sell figures and from relationships between current and past selling prices. In other words in watching the stock chart's daily changes and historical path. Which of course includes the swing in volume, and price.
It has been said that the true technician locks themselves in a room and pays no attention to any news-political, economic, or corporate-because he/she believes that the market already knows this information and has taken it into account. The technician watches and follows the chart price trends primarily because they believe that what has happened once will happen again, and that a trend continues until some force causes it to change.
(2) The fundamental analysis of stocks: is obviously the flip side of technical analysis. Simply wait until opposites day and then read the technical analysis description, pasting fundamental over the word technical.
Okay now, you really don't need to read very deep into these two definitions to see that only a "real-way-out-there" sort of trader would adhere to only the technical side of the house. I'm under the impression that at least I for one, have been searching for rolling stocks using the criteria that may be better suited for long term investment stocks. Look for example, at last week's Weekly Update and you'll see that most of the stocks are listed in the Class D and E categories. Frankly, if the stock drops and at which time I buy and then rises enough for me to sell it at a profit. I don't care what its earnings are or for that matter, what its net profit margin has been either.
(I do understand that this does not fall into the same category as the Scale Traders are in. So please disregard my tangent.)
However, we won't know if the stock is going to rise again after the drop if we haven't read up on its Company News, etc. What if they just filed bankruptcy? Well if we didn't read up on this stock with the magnificent rolling chart activity, we would assume that it's only doing exactly what we had predicted that it would do. Yes indeed, we'd be the first ones at our CPU with cash in our hand and a shine in our eyes, ready to buy that stock that won't ever rise again.
What I'm trying to hone in on here is that, I think it may be more productive to first read the news and study the chart of whatever stock catches our attention. Which by the way normally originates by way of the news. Perhaps we should utilize the following as a factor; if it quacks like duck and it walks like a duck, then it's probably a duck. Then if we're pleased with what we've found, research the fundamentals to balance our final decision making process. Is it filing bankruptcy or whatever else that may preclude its price from rising again?
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