Browsing articles from "May, 2014"

Weekly Roundup May 19-23

May 27, 2014   //   by Profitly   //   Profitly, Profitly Weekly  //  Comments Off on Weekly Roundup May 19-23

Time for another weekly roundup! Even though the general markets were slow leading up to Memorial Day Weekend, our gurus and their students still make bank!

We’ll start with Tim again. First up we have a $2,427 profit on MEDL. Sykes bought 142,500 shares at $0.20 on the 19th and sold them the same day at $0.22. Entry comments: Rebought MEDL on new rumors of new Facebook video app called Slingshot http://tim.ly/1mNbHWv remember MEDL’s CEO letter a few weeks ago said they’re working with FB on a new technology, this is EXACTLY what MEDL does with Hangwith.com. More traders will put this together & MEDL could finally be set up to run, I still have my longterm position but this is SPECULATIVE as no news will likely be announced for days if not weeks. But lowly microcaps can run 30-50-100% on rumors so I like my odd…Exit comments: Sold remaining shares, disappointing but rumor plays are tough and MEDL ALWAYS fails to hold its spikes…still holding small longterm position though as any day their actual Facebook news might spike this big time…potential re-buy also if it dips enough today or this week.

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Next we have a massive $22,072 profit on QUIK. Tim bought 54,500 shares of this stock at $3.82 on the 16th and sold them at $4.22 on the 19th, holding over the weekend.  Entry comments: Speculatively buying this multi-day breakout above 3.65, gapped up strongly today & now big buyers near day highs, reading this post http://tim.ly/1iTa4Re makes me think we might see Samsung announcement next week, I also bought some longterm as I read conference call notes, earnings miss was due to inventory issues, nothing major going forward, goal is to sell short-term at resistance of $4ish, hopefully it spikes into the market close, 30-50 cents upside, 10-15 downside, SPECULATIVE. Exit comments: Didn’t get the Samsung news I wanted for a bigger spike, but the weekend Seeking Alpha article pumped the stock price up a solid 15%, could run more, but tons of sellers already premarket 4.30-4.60…really wanted to sell 4.50 or more, but other sellers prevented that so I will take what the market will give me…potential re-buy but not gonna be aggressive here with this ugly longer term chart…might really run like EKSO/YOD all day or more likely fade like WATT did.

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Then we have a $3,707 profit on TMMI. He bought 150,000 shares of this stock on the 21st at $0.19 and sold them the same day at $0.22. Entry comments: Bought this unknown video compression play on partnership news with $30 billion Raytheon today http://tim.ly/1koDifF thanks to whoever just posted it in chat, be CAREFUL, don’t chase, remember MEDL, might move fast given news and since it’s unknown but looks to be large block sellers everywhere too sit might take a few days, I only have puny position size, goal is to make 20-40%. Exit comments: Double top at .23ish and now volume fading, disappointing, but you gotta adapt to hat price action is saying, might keep running or it might pull an MEDL and do nothing…I’ll try to stay away from these 20 centers int he future, just not worth my time to make a few cents/share & I know it’s frustrating for you guys…still gonna watch it though, potential re-buy if volume picks up again and it uptrends like it did late morning today.

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He had another big profit of $5,005 on IDN. He bought 27,000 shares on the 19th at $0.76 and sold on the 23rd at $0.95. Entry comments: Was trying to get better price, but now I’m chasing with a small position as it’s breaking out late day…totally new business offering police the ability to scan licenses via their iPhone for $50/month, big savings for police offices everywhere, 1+ million possible officers so $50 million/month opportunity, even if they capture 10% this could massive, gonna try to hold this, add to this puny position on dips. Exit comments: WOW nice premarket spike on their patent news today…the patent isn’t a big deal but its been up-trending nicely so as I always say, uptrends lead to big spikes so I’m selling into this spike…not sure if its just premarket or what but I’m taking it…congrats guys HUGE longer term win.

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Then we have 2 losses. First is a $3,860 loss on  IMI. Tim bought 35,000 shares on the 19th at $3.08 and sold on the 20th at $2.98. Entry comments: Buying for morning gap up/spike as this new Toshiba/Sandisk deal is the good news stemming from the 2/27 catastrophe when they said that relationship was over…the stock was at $3.80ish before that day, I’d expect another spike toward that level now that its holding support at $3. Exit comments: Disappointing no gap up, no morning spike, maybe rebounds later, but can’t take that chance as I thought it’d be stronger, very similar to RCON letdown, good lesson for me to take mental notes on, gotta cut losses quickly when wrong.

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Lastly there was a $14,764 loss on LIVE. Tim shorted 70,000 shares on the 23rd at $4.52 and bought them back the same day at $4.72. Entry comments: Too many waves of short squeezes today on the back of blatant promotion, I’d love a halt, more likely though I’ll look to make 30-50 cents/share. Exit comments: Didn’t get drop I wanted, risked wayyyyyyy too much, will do video explaining my screw up.

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 Next up we’ll talk about Superman, who had another SUPER week.

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First up is a $131,328 profit on IGC. He bought 42,400 shares of this stock on March 3rd at $0.91 and sold them on the 21st of this month at $1.83. Entry comments: TRADE do not chase !! RISKY – in pr yesterday they said they are looking at buying solar or medical marijuana…..personal stop loss .8…personal target…1.2-2 plus if it gets traction. Exit comments: SUPER TRADE – i may be totally wrong and this may keep going but with this kind of spike above the 4ema without news yet I have to take profit..should leave some on but trying to be disciplined – will rebut pullback to 4ema if it happens.

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Then we have a $8,829 profit on REDF. He bought 22,000 shares of this stock at $2.40 on the 20th and sold at $2.80 on the 22nd. Entry comments: SWING – Article about possible India boom and at low end of chart ……personal stop loss 2 area and personal target 2.5-2.75 plus area ..will sell if it goes against me – http://www.bloomberg.com/news/2014-05-19/india-etfs-show-signs-of-an-80-s-era-reagan-boom.html. Exit comments: SUPER TRADE – will revisit on dips if it does.

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Then we have a $18,666 profit on TGEN. This was a ONE DAY trade too! He bought 4,100 shares at $10.41 on the 21st and sold at $14.97. Entry comments: DO NOT CHASE 700k IPO today http://www.tecogen.com personal stop 8.5 and personal target 10-15 if it works .. kind of like WATT is but dangerous and I chased. Exit comments: SUPER TRADE.

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He made another trade on the 19th and 20th for a $4,855 profit on VIPS. He bought 1,000 shares at $161.58 and sold them at $166.46. Entry comments: Just a starter position……. SWING personal downside stop loss 155-157 and upside personal target 165.170 plus if it works on watch list notes…….Exit comments: SUPER TRADE 5 points or $5k on this trade stress free – will look for re-entry on dip as this is great trading stock!

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Lastly, we have a loss to point out. He lost $3,400 on SYPR. He bought 10,000 shares at $4.27 on the 20th and sold them at $4.27 on the 22nd. Entry comments: CHART – may 12 pr cyber security simulator they said state- governments are using…..personal stop loss 4ema or high 3’s and personal target 4.75-5 plus if it works. Exit comments: stopped out small loss.

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Here are previous roundup posts to help you learn how to trade!

March 30-April 4

April 7-April 11

April 14-April 18

April 21-April 25

April 28-May 2

May 5-May 9

May 12-May 16

 

The New DVD That Is The Best Trading Investment You’ll Ever Make

May 23, 2014   //   by Profitly   //   Profitly, Videos  //  Comments Off on The New DVD That Is The Best Trading Investment You’ll Ever Make

The reviews are in for InvestorsLive’s new Textbook Trading DVD, and they are amazing. Students and other customers are thrilled with this service. People are learning and making money by investing in themselves and all of us at Profitly could not be happier! Here are just a few of the most recent reviews posted on Investimonials.

“Everyone needs to start off with this as your foundation! I was honestly a bit skeptical to buy this since there are so many people out there to lure you in and give you a crap product. I saw many people mention this all over and finally decided to pull the trigger. I was in for a nice surprise, it was very well put together, the slides were not over bearing and Nate goes into great depth to get his point across without losing you in the process. I probably gone over the entire DVD 3 times since I got it 3 weeks ago and I am still picking up little tid-bits here and there each time. Since I have implemented Nate’s strategy along with his chatroom, I am finally in the green again versus blindly following ahem…the Wolf like a sheep and end up losing my entire account. This is also typed after a whole lot of caffeine after a day of dealing with $DRL and $ICLD. Thanks again Nate, I can’t wait for your next DVD to come!”

“Best Trading Investment I Have Ever Made! I’ve been trading stocks and options part-time for almost 5 years and, honestly, I’ve blown a lot of money in “market tuition” trying to learn on my own. I made lots of progress just by researching online and practicing, but my consistency was lacking and losses continued to outweigh my gains. I started following Nate about two years ago and his consistency seemed unreal to me. After seeing Nate continuously nail trades, some of which he called out live on Twitter, I decided to reach out to him to ask for advice. Nate strongly recommended this DVD and I’m extremely grateful that he did. This DVD has connected the dots for me and brought my trading to an entirely new level. The textbook patterns and risk management strategies explained by Nate in-depth have been key to my consistency dramatically improving. I was so impressed, I am now a proud Investors Underground subscriber and I can’t imagine a better mentor than Nate. If you want to LEARN to be a successful independent trader, and not just follow someone’s alerts, this DVD is essential. The knowledge and experience packed into this DVD is priceless and it literally paid for itself within my first week of applying what I learned.”

“Do Not Make Another Trade Until You Watch the DVD

3 reasons you should watch this DVD from a rookie trader.

1. STRAIGHT TO THE POINT

-Bottom line is..we ALL value money and money is time. The 8 hours of DVD is worth every hour, minute, second, millisecond, etc. None of us can buy back time, but we can make wise decisions on how we spend our time. If you have a full time job like myself, you want to make effort to be efficient with your time. Trading stock is making most of the opportunity and Nate Michaud doesn’t mess around and give you EVERYTHING you need to be successful.

2. EXPERIENCED INSTRUCTOR

The guy has been doing this for over a decade. He has found success, bc he’s also made some mistakes along the way. He’s transparent with his mistakes and for that reason the DVD becomes more real. You’re not always going to hit home runs trading and he teaches you how to minimize risks.

3. INVEST IN YOURSELF

I made my money back from the DVD purchase in the first month. INVEST IN YOURSELF!!! Along with the DVD I have also subscribed to the Investors Underground Live Chat. Simply, watching and learning from the experienced traders have given me success.

Lastly, I want to ask you a question…”How bad do you want it?” I have found that the most successful traders in the Investors Underground Chat are individuals who are prepared and diligent to position themselves to be successful. Pablo Picasso said, ‘Our goal can only be reached through a vehicle of a plan, in which we must fervently believe, and upon which we must vigorously act. There is no other route to success.’”

“This is a must have DVD. This DVD is absolutely essential to expedite any beginner trader’s learning curve. Nate does a really good job of breaking everything down into the most simple form. He starts out with his story, then terminology, charting, types of buy patterns, types of short patterns, OTC, what brokers work with these strategies, and goals.

Some of the major highlights:

– No fluff or BS

– $100 trick. This dramatically changed the way I trade.

– Pattern recognition that is easy to understand for BOTH long and short traders.

– Most importantly a separate chapter for OTCs.

– Informs us of his mistakes, so you can learn from them to evaluate good risk reward. (I’ll take a parking ticket any day!) Watch the video to understand that line.

-Most importantly, stay humble, the market aways wins…

Honestly, this DVD is UNDERVALUED. Get it while you can. I fully recommend this DVD.”

“A Must Have! Nathans Textbook Trading DVD is for sure the best made DVD which I purchased so far. I can really highly recommend the DVD. If you want to go for his Investor Underground Trading Room the DVD is a MUST HAVE! The DVD is full packed with information, Nathan speak quite fast and he don`t repeat his information 10 times like others to extend the video hours! (which is very important for me otherwise I get sleepy!) If somebody think the DVD Price is high, fine, but if you start to build a house you need also tools, good tools, otherwise you will fail. The DVD is just a tool, don`t think you know how to trade because you watched the DVD 1 time on Sunday afternoon.

The DVD is so full packed with information that you will need a couple of days to watch and understand it. The DVD is managed in chapters this makes it much more comfortable. First you think it`s too much information but when you start to trade with the Textbook Trading strategy you will wish the DVD is packed with much more hours on Bonus material. I would not recommend the DVD for complete fresh People who don`t know the Basics about candle charts. Nathan don`t explain all the Basic stuff and that`s good so. I study trading/ daytrading since 2008 and purchased plenty books and DVD`s about trading but like I wrote above, Nathans Textbook Trading DVD is for sure one of the best DVD`s which I purchased.”

“Essential Guide to Understanding Risk v. Reward My honest opinion of InvestorsLive’s DVD is that is Superb! I think if one systematically implements the DVD’s principles without emotionally deviating from them, that person will make money, consistently, As InvestorsLive says, it is not about being right all the time, but managing your risk on the long and short side of trades. This DVD shows a systematic guide to risk management by evaluating trade setups and understanding optimal trade entries and exits based on technical analysis and importantly, human psychology.”

“Wicked Awesome Education, Incredible!! This is by far the best investment I have made in order to prepare myself to become a full time trader. Nate literally shows you how and what computer to buy and set up to having a plan for your career as a trader. My kids are learning there ABC’s in school as well as in this course he breaks it down that simple. Incredible education !! There’s no better feeling in having someone teach you something prior to watching it happen after he explains what will happen. I have had some great trades due to this course.”

nate textbook

 

Leading, lagging and coincident indicators

May 21, 2014   //   by Profitly   //   Features, Profitly  //  Comments Off on Leading, lagging and coincident indicators

One of the first things you’ll hear about in any sort of economics course is the different types of indicators. You may be thinking that this isn’t important for penny stock traders to know, but you would be 100% wrong. Why?

Macro economics trends impact the general direction of the stock market and the sectors within it. If you are trying to short a stock when the market is up 5% that day due to a great jobs report number, you’re chances of having a great trade are far less than if the market was down 5% due to a horrible jobs report. Even if you have the best penny stock to trade, thinking it will be a great short since it’s a horrible company, you may time it poorly if you do not pay attention to the overall economy and market. This is a big part of learning how to trade penny stocks and earn a lot of money trading penny stocks as well.

So, what are these indicators that I’m talking about? First of all, they are all free to obtain and most of the major news outlets will cover them to a certain extent. Policy making outlets like the Federal Reserve and others use these indicators to determine where the economy is headed and at what pace it is moving in that direction. The Federal Reserve even tied the unemployment rate to their bond buying and interest rate policies. The data points are each released at a specific time that does not change, such as the unemployment report coming out the first Friday of every month.

An indicator is anything that can be used to predict future financial or economic trends. I’ve talked about the unemployment rate a lot since that is probably the most well known indicator, but other examples of the most important ones according to Investopedia are: the Beige Book released at 2pm two Wednesdays before every Federal Open Market (FOMC) meeting; the Business Outlook Survey released at 12pm the third Thursday of every month; the Consumer Confidence Index (CCI) released at 10am on the last Tuesday of the month; the Consumer Credit Report released at 3pm about five weeks after the month’s end; the Consumer Price Index (CPI) released at 8:30am at mid-month; the Durable Goods Report released at 8:30am around the 20th of the month; the Employee Cost Index (ECI) released at 8:30am on the last Thursday of January, April, June and November; the Employee Situation Report released at 8:30am on the first Friday of every month; the Existing Home Sales released at 8:30am during the fourth week of the month; the Factory Orders Report released at 8:30am during the first week of the month; the Gross Domestic Product (GDP) released at 8:30am four weeks after the quarter ends and three months after the quarter ends (revised release); Housing Starts released at 8:30am on or around the 17th of the month; Industrial Production released at 9:15am on or around the 16th of the month; the Jobless Claims Report released at 8:30am on Thursdays; the Money Supply released at 4:30pm on Thursdays; Mutual Fund Flows released during market hours every month; the Non-Manufacturing Report released at 10am on the third business day of the month; Personal Income and Outlays released at 8:30am four to five weeks after the months end; the Producer Price Index (PPI) released at 8:30am during the second or third week of the month; the Productivity Report released at 8:30am approximately five weeks after the previous quarter’s end; the Purchasing Managers Index (PMI) released at 10am on the first business day of the month; the Retail Sales Report released at 8:30am on or around the 13th of the month; the Trade Balance Report released at 8:30am on or around the 19th of the month; and the Wholesale Trade Report released at 10am on or around the 9th of the month.

Wow, I bet you never knew there was that much news that could impact the market!

So, now let’s break them down between leading, lagging and coincident.

First, what is a leading indicator? These types of indicators signal future events and are typically defined as quantifiable economic factors that change before the economy starts to follow a specific trend. One basic was to think of this is referring to how a yellow traffic light indicates that the red light is coming. Leading indicators work this way, except they are not as accurate as the traffic light. Bond yields are typically considered a good leading indicator of the market. This is because traders anticipate and speculate trends in the economy which impacts bond yields. Other leading indicators include market returns, as the stock market usually begins to decline before the economy as a whole declines and usually begins to improve before the general economy begins to recover, as well as the index of consumer expectations, building permits and the money supply.

And lagging indicators? They are measurable economic factors that change after the economy has already begun to follow a specific trend. Going back to our traffic light example, think of how that same yellow light comes after the green light. Since these indicators lag the price of the asset, a significant move will largely occur before the indicator is able to provide a signal. They confirm trends, rather than signal the trends are forthcoming. Examples include the unemployment rate, corporate profits and interest rates. Think of how the unemployment rate signals that the economy has slumped in previous months and has caused employers to lay off some of their employees.

Finally, what are coincident indicators? These indicators show the current standing of economic activity. They change at the same time as the economy. Going back to the traffic light again, the green light would be a coincident indicator of the pedestrian walk signal. Examples include personal income, average weekly work hours and Gross Domestic Product (GDP).

Weekly Roundup May 12-16

May 19, 2014   //   by Profitly   //   Profitly, Profitly Weekly  //  Comments Off on Weekly Roundup May 12-16

It’s that time of the week again! Here is your weekly roundup of our guru’s biggest trades. Learn from them!

First we have a some great trades by Tim. Let’s start off with a $2,185 profit on SUMR. Tim bought 21,200 shares of this stock on the 14th at $2.33 and sold them the same day at $2.44. Entry comments: Buying on the dip, right near multi-month support at 2.30…maybe this doesn’t get to 3 today or tomorrow, but I’d love to see the 2.60s or 2.70s, less risk now given the drop, better price. Exit comments: Nice bounce to the low 2.50s now, played it a bit too safe, but as the earlier drop proved, I can’t trust this stock too much to make any truly huge moves…potential re-buy if it can hold 2.30 support all day for better move later probably morning spike tomorrow.

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Then we have a $1,220 profit on SUMR again. He rebought it (like he said he might in his above comments) at $2.48, this time with a position size of 15,000. He sold them later that day at $2.56. Entry comments: Similar earnings winner to STKL, but lower priced, mroe volatile, breakout was 2.30 so I’m paying 20 cents/share extra but given low marketcap and story I think this could spike to 3ish today or tomorrow. Exit comments: Another earnings winner I thought would run but no dice…to be fair I missed the ideal technical breakout on both SUMR and STKL, I just thought they could each really run…good lesson to be more conservative.

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Guess what, he played that stock again! This time it was for a $3,662 profit. He bought 40,000 shares at $2.73 and sold them at $2.82. This was again on the 14th. Entry comments: Rebuying on this intraday breakout, strong price action reconfirms my earlier thesis that this can hit $3, ideally tomorrow in a morning spike so I can hold overnight and sell in the low $3s but if it touches today I might have to take profits, we’ll see over the next hour, for now the trend is amazing so I must participate as this likely breaks to new day highs above 2.78 and then we can get real spiking. Exit comments: I wish this would stop breaking out and just uptrend slowly otherwise I get tempted to take profits too quick like I’ve done all day today…hit a wall at 2.88, not sure if it can get to 3 today as these stocks usually get tons of sellers all in the .90s just before a major price like $3/share.

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Then we have two losses to talk about. First is a $3,647 loss on RCON. He bought 20,400 shares of this stock at $4.15 and sold them at $3.97 the next day. Entry comments: Buying this earnings winner on the dip off its highs, it likes to spike in the morning as we saw today, it moves fast so my goal is to sell into a similar spike tomorrow ideally in the mid to high 4s…not surprising it consolidated all day long due to down overall market and digesting bagholders in at higher prices…not much downside here, should have support at 3.90-4ish, I’d LOVE to sell in the 4.50s. Exit comments: No morning gap up or spike right near the open like yesterday means I gotta cut losses quickly, never fun or easy…but trade like a sniper, be methodical, move onto the next potential runner…these are the rules by which I trade and following these rules makes me wealthy, break the rules and sure sometimes you’ll get lucky but getting lucky is very different from winning 75% of the time and growing your account exponentially quickly like my top students have.

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Then we have a $1,979 loss on ATEN. Tim bought 4,645 shares of this stock at $12.46 and sold it that same day at $12.32. Entry comments: Stock breaking to new highs on rumors of Seeking alpha article, similar chart to WATT so be careful if article hits and does nothing, should rise in anticipation though, beaten down hot technology stock, no real resistance for 75-90 cents/share, low volume play though so don’t chase it if it spikes too fast as other traders realize the potential. Exit comments: Unlucky, bad news JUST came out in SEC filing, explains selling, gotta cut losses will explain later…traders sharing this news: ATEN 10q discloses a received letter alleging CEO Chen at a previous company breached his fiduciary duty, misappropriated intellectual property, and diverted employees and investors from that entity to ATEN.

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Next up we have Supertrades. He holds his positions for a lot longer, and he cashed in on a few this week for some “super” profits! First we have a $2,901 profit on WATT. He bought 15,000 shares of this stock at $11.77 back in April and sold it at $11.97 on the 14th. Entry comments: CHART – IPO that i made 50k on….tech for wireless charging….filled gap in 10’s and now above 4ema which is my personal stop loss…12.50 plus would be personal target. Exit comments: Did not respond to news today….may still work will re0visit for entry but have to be conservative in this market – take profits when can and use stop losses.

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Next we have a $7,165 profit on KONE. He bought 7,000 shares of this stock on the 13th at $3.55 and sold them the next day at $4.57. Entry comments: SWING – DO NOT CHASE LOW FLOAT – earnings soon and supposed to swing to profits this year…history of runs …personal stop loss 3 area and personal target 4-5 plus if works. Exit comments: super trade will revisit on dips.

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His biggest profit of the week is next. He made $15,885 on RCON. He bought 45,000 shares on January 28th at $4.94 and sold them on the 15th of last week at $5.29. Entry comments: from watch list stop loss low 3’s target 4-6 on china shale. Exit comments: Taking off on this bounce on report….will look for re-entry as it settles down.
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Then we have one loss to talk about. He made a trade that cost him $8,955 on DQ. He bought 3,300 shares on the 12th at $37.76 and sold them on the 14th at $35.05. Entry comments: TRADE/SWING earnings winner reported tonight….personal stop loss 37ish and target 40 plus if it works …history of moves….smaller position. Exit comments: Bad trade but totally screwed over as they released share sale 15 minutes after awesome earnings.

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We also have some great trades from Nathan at InvestorsLive!

First up is a $1,070 profit on FEYE. He bought 2,000 shares of this stock on the 12th at $27 and sold them later that day at $27.54.

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Next we have a $1,435 profit on FB. Nathan shorted 4,000 shares of this stock at $60.03 and bought them back at $59.66.

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Third we have a $3,183 profit on JCP. This was another short. He sold 10,000 shares at $9.26 and bought them back at $8.94.

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Another big profit comes from UEC. Nathan made $3,013 on this stock when he shorted 25,950 shares at $1.53 and bought them back at $1.41

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Lastly we have one loss to talk about. Nathan had a $3,888 loss on TSLA. He shorted 1,500 shares at $182.49 and bought them back at $185.08.

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Here are links to previous roundup posts. Check them out!

March 30-April 4

April 7-April 11

April 14-April 18

April 21-April 25

April 28-May 2

May 5-May 9

 

Value vs. Growth Stocks

May 16, 2014   //   by Profitly   //   Market, Profitly  //  Comments Off on Value vs. Growth Stocks

Not all stocks are created equally. There are two distinct groups of stocks that people often talk about: value and growth. So what’s the difference and how can you pick the best ones to trade? Penny stock traders should know the difference even though this isn’t distinctly penny stock research. It can still help you find the best penny stocks to watch.

Well, a growth stock is a company whose earnings are expected to grow at an above-average rate relative to the market. Since they tend to reinvest their earnings into company projects, they do not typically pay dividends. The newer stocks in the tech sector like Twitter would be known as more growth stocks. Something like Google on the other hand wouldn’t be as much of a growth stock since it does pay dividends. Recently there has been a debate on whether Apple is a growth or value stock.

So how do people trade these stocks? Growth investors believe in buying stocks with above-average earnings growth and disregard the current price of the stock. The guiding principle of growth investing is to look for companies that keep reinvesting into themselves to produce new products and technology, in other words, they focus a lot of their capital on research and development.

On the other hand, a value stock has a tendency to trade at a lower price relative to its fundamentals. The fundamentals could be things like earnings or sales. This causes the stock to be considered undervalued by a value investor. The common characteristics of these stocks are: a high dividend yield, low price-to-book ratio and/or low price-to-earnings ratio. A value investor has the belief that the market isn’t always perfectly efficient and that finding companies trading for less than they are worth is a possibility.

Value investors look exclusively for  stocks that are trading at a discount to their usual valuation or what people calculate they should be worth based on things like future earnings projections. It’s important to know the difference between growth and value because they react differently in economic situations. A value stock’s earnings typically fluctuate with the economy and tend to do well when the economy is accelerating out of a recession.

Something else that separates traders looking at value from growth is how they view the market. Growth investors are very forward looking while value investors tend to look at history. People trading growth stocks propose that companies with above average growth rates will generate returns that are also above average. The problem with this strategy arises with the realization of that growth. In order for the price of the stock to rise, the company needs to achieve those growth expectations. Traders looking at value stocks take a lot of time to examine financial statements to estimate the value of the stock to compare it to the current trading price. If the calculated value is a significant amount lower than the current trading price, the investor will buy the stock. The problem arises in getting people to agree on what the calculated value should be.

There are studies that show your returns benefit over time when you buy stocks that are cheap relative to others, aka a value stock. To explain this, think of price to earnings ratios. Suppose stock XYZ typically trades with a P/E ratio of 15 to 25. If you buy XYZ when it is trading at a P/E of 16, and then it goes to 22, you can sell it when the P/E ratio starts to fall back towards the lower end of that increment. This isn’t a risk free investment. If it were, everyone would follow this strategy. Risk becomes involved since you face the possibility that XYZ’s P/E has fallen because the company no longer justified at that level due to various reasons such as business outlook or macroeconomic factors.

Almost all penny stocks are more likely to be growth since hardly any of them will pay dividends. I mean, if a company is worth so little, it’s unlikely they are going to be able to pay out dividends or buy back stock. They’re probably too busy paying their promoters to send money to penny stock traders. Remember that most penny stocks are pump and dump penny stocks.

Taking both of these strategies into account, you might ask why people don’t simply invest in a stock that has a low P/E and a rapid rate of earnings growth. Well, this is because these situations are rare. Any hint of growth attracts investors and increases the stock price. This doesn’t mean that these situations never happen, you just have to do a lot of research and be prepared to act quickly. People make and lose money with each of these strategies, so it is more or less about finding out which is right for you and then adjusting accordingly.

Weekly Roundup: May 5-May 9

May 13, 2014   //   by Profitly   //   Profitly, Profitly Weekly  //  Comments Off on Weekly Roundup: May 5-May 9

Time for another weekly roundup of guru trades on Profitly! Remember that we aren’t going to write about every single trade in this post, since that would be extremely boring. We are just covering the big, exciting trades that you all want to learn from.

First up we have a bunch of great trades from Tim!

Let’s start with a $3,036 profit on IDN. Tim bought 50,000 shares at $0.63 on the 9th and sold them the same day at $0.69. Here are his comments: Entry comments: Bought this former runner on a dip due to their releasing Fugitive Finder app http://tim.ly/1oxws7Z already got some press, I expect more over the weekend, earnings next week, expect them to hype it up, I wanna make 10-20-30% if this catches a bid, low risk given the rop from $1/share. Exit comments: Grrrr as I type this it just broke through .69 so I played it too safe…oh well, anyway I’m out, here’s my commentary: Got a nice spike off the news, but it can’t seem to break .69, May 2nd resistance, I thought it could at least get up to .75ish resistance, perhaps I’m playing it too safe, perhaps its just the overall market…speculative play though, I’ll rebuy on any big dip or breakout…gotta respect intraday double tops though.

Tim IDN

Second we have a $3,857 profit on NLS. This was another one-day trade where he bought 20,000 shares at $9.92 and sold them at $10.11. Here are his comments: Entry comments: Earnings winner technical breakout, goal is low 10s. Exit comments: Got a nice spike to 10.30ish but couldn’t get executed, trade done live on my http://tim.ly/sykesmc webinar, probly more of a longterm buy given how real this company is, but it’s a PERFECT multi-year breakout so respect it as long as it holds the 9.90-10 breakout level…potential re-buy on any dip if it holds support.

Tim NLS

Next we have a $5,100 profit on ARCI. Tim made this trade on the 6th, buying 20,000 shares at $3.45 and selling them at $3.71. Entry comments: Bought this earnings winner in the hopes it breaks above multi-month resistance at 3.60, already touched it once today but now I’m buying on the dip, 50-70%/year growth in their recycling subsidiary won’t go unnoticed forever & this is just a $20 million company so I think it could be a multi-day runner, limited downside compared to potential upside, goal is to make 15-30% in 1-2 days short-term, also bought some in my http://tim.ly/timlong longterm portfolio. Exit comments: Got a solid spike as several chatrooms/newsletters piggybacked the technical breakout at 3.60, this is why it’s SO crucial to see & know these key technical levels ahead of time, holding onto my longterm position, but this 10% spike is near best-case scenario short-term.

ARCI

Lastly, we have one notable loss, $2,691 on WPRT. Tim bought 13,000 shares on the 2nd at $16.10 and held over the weekend before selling on Monday at $15.89. Entry comments: Bought this strong earnings winner, thats been uptrending all day 12 million shares short, methinks multi-day short squeeze, all I want is 50-75 cents/share next week, 15-25 cents/share of downside risk, I like my odds, c’mon analyst upgrade! Exit comments: No morning spike/gap up, might happen later, but I went in with specific thesis, didn’t play out so I play this safe and cut losses quickly…GREAT trade…I never mind small losses as long as I stick to the rules, I know that’s difficult for newbies to understand, but when the upside is 50-75 cents/share and downside is 10-20 cents/share, if the downside happens, all u can do is cut losses quickly…that makes it a good trade…letting losses potentially run would make it bad, understand?

WPRT

Superman holds his trades for a longer period of time, so he doesn’t have as many to talk about. This week we only note a $1,100 loss on SKUL. Superman shorted 5,000 shares of this stock at $6.80 and bought them back at $7.02. Here are his comments: Entry comments: TRADE – Shorted on rumor/story AAPL going to buy beats by DRE …mental stop 7ish and target low 6’s or more. Exit comments: covered on phone in taxi for small loss.

super

Last but not least we have InvestorsLive. First up we have a $1,628 profit on PGFY. he shorted 17,500 shares of this stock on the 5th at $1.32 and bought the shares back at $1.22 that same day.

IL PGFY

Then we have a $4,969 profit on SPWR. He shorted 5,450 shares at $33.76 and bought them back the same day at $32.85.

IL SPWR

Third we have a $1,475 profit on TSLA. He shorted 800 shares at $184.47 and bought them back at $182.62.

IL TSLA

This trade was covered in a video lesson for subscribers.

Then we have two losses that you should all learn from. First is a $21,297 loss on HDY. He shorted 36,832 shares at $2.89 and bought them back at $3.47.

IL HDY

Second we have a $11,331 loss on TWTR. He bought 5,024 shares of this stock at $36.26 and sold them at $34.01.

IL TWTR

Check out his latest webinar for lessons on risk and losses for more learning materials.

March 30-April 4

April 7-April 11

April 14-April 18

April 21-April 25

April 28-May 2

 

Why The Bull Market Is Great For Penny Stocks

May 7, 2014   //   by Profitly   //   Market, Profitly  //  Comments Off on Why The Bull Market Is Great For Penny Stocks

A lot of people think that a bull market can hurt penny stocks. They’ll argue that the bull market will cause them to rise too far when Tim wants to short them or that people will look at more typical stocks rather that some of the crappy companies that are what we know as penny stocks. These may be true to an extent, but the pros far outweigh the cons. Let me explain.

The bull market that many say we are currently in brings up some common misconceptions about penny stocks and Tim’s and the other gurus’  strategies.  They don’t only short penny stocks, they find the best penny stocks to buy as well. Just check out how much money people are making through the posts we have on Profitly. Here is how much some of our gurus are up year-to-date:

Screen Shot 2014-05-03 at 9.24.49 AM Screen Shot 2014-05-03 at 9.25.11 AM Screen Shot 2014-05-03 at 9.25.33 AM

Tim is up more than $560k, Super Trades is up more than $630k and InvestorsLive is up more than $270k. That means they have all made more so far this year than most of the people reading this post will make all year. Still think the bull market is bad for our traders? Not at all. Bull markets make it easier than ever to find awesome penny stocks and the best penny stocks today. Most people just don’t understand how penny stocks work.

The gurus do short stocks, as you can see in our weekly roundups, but it should be pointed out that bull markets are great for finding blatant pump and dumps to short. In a bull market, promoters are more likely to find companies that want to take advantage of the larger number of people jumping in to stocks and looking for “great investment opportunities.” That means they are willing to pay the promoters more and the pumps will go higher than if it were a bear market. Then, the higher the stock goes, that more it has to fall and the more money there is to be made from shorting the stock. Investors will be looking for stocks that are marketed as undervalued and have strong growth potential. These are things that promoters often portray in their spam emails, generating a large pool of investors in a short amount of time. Once the promotion stops, there will no longer be a large group of new investors. The strength and hype will quickly disappear and the current investors will realize that the company is not nearly as great as the promoters were making it out to be. This creates a sort of panic, meaning investors will sell as soon as possible. Since there will be far more sellers than buyers, the stock will crash at a rapid pace. This presents more opportunities for you to learn how to trade penny stocks.

As Tim has noted on his blog before, he likes to short into strength. Bull markets create the most strength in some of the worst companies in the world. Another important thing to mention is that Tim and the other Profitly gurus like to buy earnings winners and breakouts. These types of trading plays are far easier to find in a bull market. Companies are more likely to have positive earnings surprises and breakout above key technical levels. Tim has done several videos for trading challenge students on how to spot and buy breakouts. These videos are even more beneficial in a bull market. He also wrote a blog post and did a video of how he made $4,000 in 2 minutes buying a breakout during the bull market.

Supertrades is another guru that has had some amazing trades in the bull market. He focuses a lot on finding momentum plays, and those are all over the place in a bull market.

So before you start thinking that you should wait until a stock market crash to learn how to trade all penny stocks from our gurus, think of the amazing opportunities you’ll be missing out on for penny stocks in 2014. There are new penny stocks to trade every day, and you are going to keep missing out on the next trade until you learn from the best.

Weekly Roundup: April 28-May 2

May 6, 2014   //   by Profitly   //   Profitly, Profitly Weekly  //  Comments Off on Weekly Roundup: April 28-May 2

Time for another weekly roundup of guru trades on Profitly! Remember that we aren’t going to write about every single trade in this post, since that would be extremely boring. We are just covering the big, exciting trades that you all want to learn from.

Tim had another awesome week with some big profits and no big losses! That’s what happens when you are disciplined, my friends. First off we have a $2,239 profit on VTNR. Tim bought 13,985 shares of this stock on the 29th at $8.85 and sold them the next day at $9.01. Here are his comments: Entry comments: Buying on this solid daily breakout, goal is to sell into a morning gap up/spike to the low or even mid 9s, best chart out there, finishing better than COUP, even above morning highs of 8.75, wish I had some http://tim.ly/timlong from my initial buy alert at $7.95, good lesson for me, no specific catalyst but the chart is pretty. Exit comments: Got up to 9.27 premarket and 9.10 when the market opened, but not much more than that, now 8.90s, disappointing but that’s why I get out IMMEDIATELY if the stock doesnt do what I want.

Screen Shot 2014-05-03 at 8.31.32 AM

Next we have a $6,130 profit on WATT. He bought 7,700 shares of this stock on May 1st at $11.93 and sold them that same day at $12.73. Not too shabby! Here are his comments on this trade: Entry comments: Multiple chatrooms say Seeking Alpha PRO article coming out tomorrow, MR. http://tim.ly/supertrader even linked to it http://tim.ly/1mhGaOH should skyrocket the stock, not much downside given recent consolidation, goal is to make $1-2/share the next 1-2 days. Exit comments: Got a nice mid-day spike, now 12.99 so I played it too safe….as I said I HATE buying mid-day, volume is less, the moves are less, but this was up trending and the news is being passed around in chatrooms/message boards and this stock moves fast so better safe than sorry…similarly I’m selling to lock in SAFELY, might re-buy later, but I don’t trust mid-day moves like this, congrats to all longs, no way to lose $.

Screen Shot 2014-05-03 at 8.31.47 AM

But that wasn’t even his best trade of the week. Here is the big one…a $11,734 profit on WATT. Tim bought 16,000 shares of this stock on the 1st as well at $12.49 and sold them at $13.23 the next day. Nice one! Here are the comments: Entry comments: Bought on the big intraday consolidation, don’t chase this, but I like buying on the dip as it should spike into the market close given the expected article coming tomorrow, goal is to sell in the high 12s again. Exit comments: Selling remaining position, article is now out http://tim.ly/1mhGaOH but price action is fugly.

Screen Shot 2014-05-03 at 8.30.54 AM

InvestorsLive also had a great week with some big trades and only one big loss worth noting. Nice! First we have a $1,504 profit on FB. Nathan bought 10,000 shares on the 28th at $57.13 and sold them that same day at $57.29.

Screen Shot 2014-05-03 at 8.40.21 AM

Next we have a $1,293 profit on ITCC. He shorted 10,000 shares of this stock at $0.37 on the 30th and bought it back the same day for $0.23. 

Screen Shot 2014-05-03 at 8.42.14 AM

Next we have a $2,226 profit on MACK. He shorted 8,000 shares of this stock at $7.32 on the 1st and bought it back that same day at $7.04. 

Screen Shot 2014-05-03 at 8.44.26 AM

Lastly, we have a $2,07 loss on NVAX. Nathan shorted 46,300 shares of this stock at $4.15 on the 29th and bought them back the same day at $4.19. 

Screen Shot 2014-05-03 at 8.41.17 AM 

Be sure to check out other trades on Profitly as well, as the more you see the more you can learn from others. It’s the only way to find out the best penny stocks to trade and know exactly how to trade penny stocks as well.

Here are links to our previous weekly roundups:

March 30-April 4

April 7-April 11

April 14-April 18

April 21-April 25

CAPE Ratio Pointing to a Downturn?

May 2, 2014   //   by Profitly   //   Market, Profitly, Risks  //  Comments Off on CAPE Ratio Pointing to a Downturn?

With the Dow and the S&P near record highs and people talking about a bubble in the tech and biotech sectors, a lot of people are studying up on different valuations so they can catch the next big trade and trade the best stocks, whether long or short. The Dow’s recent record closing high of 16580 on Tuesday and intraday record of 16631 on April 4 along with the S&P 500’s record closing high of 1890 on April 2 and intraday record high of 1897.28 on April 4 have everyone buzzing about stocks trying to find the best stocks out there.

One of the valuations metrics that people have been looking at lately is something called the “CAPE ratio,” also known as the “P/E 10 Ratio” or “Shiller PE ratio.”

So what exactly is it and how can it help you learn how to trade the best stocks and find the best stocks to invest in? Let’s start with this a great definition by Investopedia:

“It’s a valuation measure, generally applied to broad equity indices, that uses real per-share earnings over a 10-year period. The P/E 10 ratio uses smoothed real earnings to eliminate the fluctuations in net income caused by variations in profit margins over a typical business cycle. The ratio was popularized by Yale University professor Robert Shiller, who won the Nobel Prize in Economic Sciences in 2013. It attracted a great deal of attention after Shiller warned that the frenetic U.S. stock market rally of the late-1990s would turn out to be a bubble. The P/E 10 ratio is also known as the “cyclically adjusted PE (CAPE) ratio” or “Shiller PE ratio.”

The P/E 10 ratio is calculated as follows – take the annual EPS of an equity index such as the S&P 500 for the past 10 years. Adjust these earnings for inflation using the CPI. Take the average of these real EPS figures over the 10-year period. Divide the current level of the S&P 500 by the 10-year average EPS number to get the P/E 10 ratio or CAPE ratio.

A criticism of the P/E 10 ratio is that it is not always accurate in signaling market tops or bottoms. For example, an article in the September 2011 issue of the “American Association of Individual Investors’ Journal” noted that the CAPE ratio for the S&P 500 was 23.35 in July 2011. Comparing this ratio to the long-term CAPE average of 16.41 would suggest that the index was more than 40% overvalued at that point. The article suggested that the CAPE ratio provided an overly bearish view of the market, since conventional valuation measures like the P/E showed the S&P 500 trading at a multiple of 16.17 (based on reported earnings) or 14.84 (based on operating earnings). Although the S&P 500 did plunge 16% during a one-month span from mid-July to mid-August 2011, the index subsequently rose more than 35% from July 2011 to new highs by November 2013.”

One prominent individual that has been taking a close look at valuation measures, including the CAPE ratio, is Henry Blodget, editor-in-chief of Business Insider. In a recent post, he said “Every valid valuation measure I look at suggests that stocks are at least 40 percent overvalued,” adding that he wouldn’t be surprised if we saw a crash soon. He thinks that just investing in stocks is likely to deliver crummy returns for the next seven years (or so). Not only does that mean that give you more reason to learn from people like the gurus on Profitly that trade rather than invest, it means that the average person in the stock market isn’t going to do very well for the next several years. His points and reasons for coming to this conclusion? He lays out the bullish and bearish cases:

  • Every valid valuation measure I look at suggests that stocks are at least 40% overvalued.
  • Corporate profit margins are at record levels and look like they might finally be rolling over.
  • Lots of sentiment indicators are flashing warning signs (folks are just way too bullish).

And what are the arguments that these concerns are silly and that stocks will keep rising?

  • One of the big bullish arguments seems to be that “there’s no catalyst” for a crash or bear market.
  • Another bullish argument is that the economy’s getting better.
  • Lastly, there’s a general sense that the financial crisis is finally over and that everything finally feels fine.

So which valuation measures suggest the stock market is very overvalued?

  • Cyclically adjusted price-earnings ratio (current P/E is 25X vs. 15X average — higher than any time in the past century with the exception of 1999-2000 and, very briefly, in 1929).
  • Market cap to revenue (current ratio of 1.6 vs. 1.0 average).
  • Market cap to GDP (double the pre-1990s norm).

Here is a recent chart of the CAPE ratio from Bill Hester of the Hussman Funds.

shiller-cape-1

The blue line shows the prediction for 10-year returns. The red line shows the actual returns. If you have heard people say, “CAPE doesn’t work anymore,” you might want to read Bill Hester’s analysis. He looks at all the arguments why CAPE doesn’t work and concludes that it does. (We’ll know for sure in 10 years.)

Second, in case you have been convinced that the “CAPE” ratio no longer works, here’s a look at price-to-revenue.

screen shot 2013-12-24 at 8.58.26 am

This measure is calling for a slightly better long-term return for the S&P 500 — just under 5% — but still a far cry from the long-term average. And far less than the guru’s and their students make in a year. Can you see why looking at charts like this will help you better understand technical patterns and other charts that the gurus look at? You have to know about stuff like this if you want to be a successful trader. Profitly gives you the tools and resources to learn from the best.