Tag: stock price

  • How to Find a Stock Worth Trading?

    How to Find a Stock Worth Trading?

    How to Find a Stock Worth Trading?
    To find a stock worth buying several parameters should be estimated and examined. Here is what really matters.

    By Guy Avtalyon

    If you want to know how to find a stock worth trading, think about the stock’s valuation, strategy, plans for diversification, and your appetite for risk.

    The first consideration on how to find a stock worth trading should be the company’s earnings. Profitability is important because when you buy a stock, you’re buying a part of the company. Calculate its P/E ratio, just divide the share price by a company’s annual net income. 

    For example, if a stock trades at $30 and has an annual net income of $3 the P/E ratio is 10. The general rule of thumb: if the stock’s P/E ratio is higher than the broader market P/E, it is considered expensive and vice versa.

    But the P/E ratio isn’t a perfect measure. For example, a small, fast-growing company may have an extremely high P/E ratio but earnings are poor while the stock price can be high. You have to gauge if there is any potential for strong growth and if there is, such stock may not seem expensive.

    So, look for trends in a company’s earnings growth. Find do the earnings regularly increase. If you have a confirmation for that, get it as a good indication that the company is operating well. There is no need for an incredible increase, even a small increase can be an indicator of a positive outlook, but only if it is consistent over a long time.

    Volatility matters

    The volatility in the stock market is natural. The companies are losing value in the markets from time to time but also could increase the value. Every trade you make in the stock market is actually kind of betting on the market direction, on the volatility, or both.

    For stocks trading, volatility is good for the long term because you have to make a profit. And you can do that only if the stock price fluctuates. If you really want to find a stock worth trading, seek the high volatile stocks.

    If the stock has a high volatility the value could be spread over a large span of values. This means the price of the stock could fluctuate drastically in a short time, which is ideal for fast-moving trading. Contrary, if the volatility is low, the stock’s price will stay almost steady which offers fewer chances for a quick profit.

    Beta as a measure of volatility

    Use beta as a measure to unveil how volatile the particular stock is.

    The beta can predict the total volatility of a stock’s returns against the returns of a related benchmark, for example, the S&P 500. If you find that beta value is, let’s say 1,3 that means the stock price moved about 130% for each 100% in the related benchmark index. Hence, if the beta value is 0.6 that would mean that stock has moved just 60% for each 100%  in the related benchmark.

    Trade volume matters

    Volume is the total number of shares traded in a market during a particular period. Each transaction adds to the total volume. For example, if during one trading day there are 100 transactions, the trade volume for that day would be 100. How to find a stock worth trading when using trade volume? Volume works as a great indicator that adds weight to the market move. For example, if some sudden spike appears, the strength of that movement depends on the volume during the time observed. 

    When picking a stock worth trading, pay attention to how great is volume. The greater volume, the more important the move is.

    How to find a stock worth trading?

    So finding a stock worth trading is a matter of combing for stock with large volume, a current spike in volume, and a beta higher than 1.0. The stock that lacks these elements will be very difficult to trade successfully.

    The way you use these factors will affect your possible profit. The trading style depends on your trading strategies. You have to find a stock whose price changes to profit from that fluctuation. It is impossible to profit from trading stocks if there are no changes in price. Also, the same comes if the volume is low. The low volume shows a lack of buyers and sellers. How to profit from that?

    Stock Price

    You may consider the stock price. Some companies could distribute additional shares and increase the number of available shares but lower the price per share in the market. Some will never do that. It is considered better for investors because such stock could rise more in price and worth more after some time. Anyway, the stock price will show you how many shares of a particular stock you can buy for the capital you have. Pay attention to stock price historical performances. That will give you a clue how the stock is possible to play in the future and is your chosen stock worth buying.

    But active traders will prefer, for example, stocks in play but they’ll need to carefully watch the news because such stocks are not the same every day. 

    How to find a stock in play worth trading?

    These stocks are suitable for day traders because they are changing dramatically sometimes during the trading day. Also, they carry enough volatility to generate favorable risk and reward trading ratios.
    Day traders will normally look for stocks that have big price changes during the one trading day. These stocks are not a good choice for investors with a long time investment horizon.
    Active traders expect more action. They exit the trade much before the end of the trading day, sometimes a few minutes after they enter the trade. These trending stocks can be found on many broker’s trading platforms. There you’ll find stock worth trading.

    Bottom line

    Trading, even if it is considered as a risky strategy, can be highly profitable. Of course, if you know how to find stock worth trading. As we mentioned above, pay attention to trading volume, volatility, liquidity, and price. All of these criteria together will help you to find the stock worth trading.  

  • Stock Market Bottom And How To Recognize It

    Stock Market Bottom And How To Recognize It

    Stock Market Bottom And How To Recognize It
    Nobody can with certainty predict a stock market bottom. Still, it’s worth at least thinking about different entry points to let your money work for you.

    By Guy Avtalyon

    The questions for the past several weeks mainly were all about the stock market bottom. Did the stock market hit the bottom? Will the stock prices stop dropping? Have stocks reached support levels? When will prices stop falling? 

    Stock traders have so many questions these days and weeks. But do they really know where to look? 

    Maybe one of the most terrifying jobs related to investing is about the stock market bottom and how to recognize it. The idea to predict when a given stock will hit the bottom is old as much as investing and trading. The point is to recognize the point where the stock will no longer drop. The rule of thumb is: buy low, sell high. The problem arises when we have some unpredictable events in the market such as this one, coronavirus pandemic. That has an influence on the global economy, almost all economic and political events, and decisions. So, with a high level of certainty, we can say finding the stock market bottom can be a discouraging job.

    Well, this kind of question traders ask almost every day but are they looking in the right place to find the answer? For example, investors are looking at Dow Jones. Is it the right place? We are afraid that the value of DJIA isn’t able to alarm you when the stock market hits the bottom. Okay, it will tell you but after it happened. 

    So what to do? 

    How to recognize the stock market bottom? 

    If you want to find it, you’ll need some indicators. Indicators can tell you when is the stock market going to hit a bottom but also when it is going to recover. By using indicators you’ll not miss the beginning of the wave. When buying a stock you want to do so at the lowest possible price but you wouldn’t like to hold falling stocks. You would like them to start rising after you bought them, right? That’s why it is so important to recognize the stock market bottom. The point where the stock can find support.

    That knowledge can give you huge profits and prevent huge losses. So, how can we know with certainty that a stock has touched a low point? To be honest, no one can do that with 100% certainty and consistency, but traders and investors have some tools, fundamental and technical trends, and indicators. They arise in stocks when they are about to tap the bottom.

    The indicators of stock market bottoms

    Some indicators can help us determine when the stock market is going to form a bottom. What we really need to have are indicators of the health of a global economy and what the main participants in the market are doing with their money. But keep in mind, there is no such thing as a magic indicator to identify a stock market bottom. We have to look at several indicators to have an idea of the economy’s and stock market’s health.

    Second, we have to look at history because it will tell us that the average bear market persists about 17 months. Also, it corrects around 35% from the maximum. But keep in mind that you cannot find the two bear markets alike 100%. All we can do is to suppose that the next will be similar. 

    Further, we have to understand the valuation. For example, the S&P 500 has a P/E ratio and earnings. The P/E ratio will move up and down depending on the market period. It will be up when we have good earnings growth, all ratios including the P/E ratio will go up. But when the circumstances are changed, with rising pessimism the valuation is likely to go down. 

    For example, when the S&P Index was above 2.500 the P/E ratio was at 19.

    Also, the higher the VIX is, the chances for the stock market to hit the bottom are growing. These first two days in April this year, VIX traded between 54 and 57. If we take a look at historical data we can see that in 2008, the VIX was somewhere between 70 and 95. During the March this year, VIX traded over 75.

    Other indicators of the stock market bottom 

    The stock market fell over 25% in 3 weeks. This is the sharpest drop in history. The biggest decline occurred on March 12th, the biggest since the market crash in 1987. Many investors thought that a stock market hit a bottom. 

    If you want to recognize when the stock market bottom is, check out your emotions. Did you feel fear at that time? If yes, you were one of the millions with the same emotion. Fear was so obvious in the middle of March. To be honest, almost all were panicked.

    But we have to try to be reasonable. Just take a look at the charts and the technical levels for those days. Can you notice the major pivot? Do you notice a bottoming tail and a huge volume? 

    Okay! A major pivot, bottoming tail, and a huge volume on the same day and combined with a market 3-weeks decline of 25%, are indicators there was some at least short-term bottom.

    What to do when the stock market is near the bottom?

    The most intelligent investors started to buy those days. Small chunks, nothing big. Smart investors are doing such a thing to accumulate their full positions. The point is to buy 25% or 30% even 50% of the total position. That will keep your potential stress down and provide you an all in all a better average. But remember, don’t buy some small-cap, go for the brands. 

    Where is the market bottom now? 

    That is the most frequently asked question since coronavirus appeared. 

    Market experts like to say that it’s impossible to time the market. Well, it isn’t the truth. If we can see the market tops, why shouldn’t we see the market bottoms? Institutional investors know that. Follow what they are doing. Their actions could be the key bottoming signal. Follow-through has been noticed at almost every stock market bottom. This signal is extremely important because it can provide you profits when the early stages of a new market uptrend is confirmed.

    The quest for a stock market bottom

    This signal works quite simply. When there is a sustained stock market downturn, the first rising day from the index low is most important. That could be the beginning of a rally attempt. No matter which index you are using S&P 500, Dow Jones or Nasdaq. 

    According to some experts, the gain expressed in percentages isn’t important at this point. Also, don’t pay attention to the trading volume. What you have to look at is a down session and the moment when the index bounces after a great drop and closes close to session highs. Some experts deem that closing in the top half of the day’s trading range is adequate also.

    Further, find a bigger percentage gain in higher volume than the prior session several days in the rally attempt. This time period is making it possible for short covering to resolve and for a rally attempt to gain ground. The rally will be halted in place only if the index reaches a new low.

    How will the market react after the pandemic?

    It is good if the market supports the new buyings, but if it doesn’t, just be patient. Sometimes, breakouts are visible on the charts after a few weeks. This market crash caused by the coronavirus outbreak has a large supply of stocks making the new base. But a lot of them have yet to bottom.

    If an index suffers a decline in higher volume shortly after the follow-through day, the signal will fail in most cases. If close below the low of the follow-through day, it is almost the same. It is more the sign to start selling the stocks you bought recently.

    These signals don’t mean you should rashly jump into the market since they tend to fail after indexes have dropped clearly in a short time. That happened with the stock market correction in February. The more suitable is to buy a few stocks, maybe one or two, and test how they will work. If there is a real uptrend your stocks will rise.

    Every investor wants to know when trends are going to make a significant change. Will they reach tops or bottoms. The truth is no one knows that for sure. Only the big volume spikes, and staying stick to the chosen sector, will give you some clue if the stock has reached the lowest level from which it will not decline more. We pointed just one of the numerous scenarios. There are many others. 

  • 52-Week High or Low – Should You Buy Or Sell Stocks

    52-Week High or Low – Should You Buy Or Sell Stocks

    (Updated October 2021)

    52-Week High/Low - Should You Buy Or Sell Stocks
    When you see a stock going to its 52-week high or low, what is your first reaction? Do you think you should sell or buy it? This is a difficult part and we will explain why.

    A 52-week high or low is a technical indicator and every investor or trader should keep an eye on these tables because it is the simplest way to monitor how our stocks are doing. For example, you want to buy some stocks and this can be the best way to check their recent prices. A 52-week high or low will help you to determine a stock’s value and usually can help to understand the future price changes. 

    Investors often refer to the 52-week high and low when looking at the stock’s current price. When the price is nearing the 52-week low, the general opinion is it is a good time to buy. But when the stock price is approaching the 52-week high, it can be a good sign to sell the stocks.

    So, the 52-week high or low values might help to set the entry or exit point of your trade.

    Prices of stocks change constantly, showing the highest and lowest values at different periods of time in the market. A number marked as the highest or lowest stock price over the period of the past 52 weeks is called its 52-week high/ low.

    How to determine the 52-week high or low

    It is based on the daily closing prices. Don’t be surprised if you can’t recognize some stock. Stocks can break a 52-week high intra-day, it may end up at a much lower price, a lot below the prior 52-week high. When that happens, the stocks are unrecognized. The same comes when the stock price hits the new 52-week low over the trading session but doesn’t succeed to close at a new low. 

    Well, the stock’s inability to make a new closing 52-week high or low can be very important.

    If you watch the prices for some stock, for example, over a particular period of time, you will notice that sometimes the price is higher than others but sometimes it is lower than all others.
    The 52-week high or low for the price of any actively traded stock (also any security) shows the highest and lowest price over the previous year that is expressed as 52 weeks.

    For example, let’s assume you are looking at changes in the price for some stock over the prior year. You found that the stock traded at $150 per share at its highest and $80 at its lowest. So, the 52-week high or low for that stock was $150/$80.

    When to buy a stock

    What do you think? Is it better to buy stock from the 52-week low record or from the 52-week high record? You can find these lists on financial sites like Yahoo Finance, for example. On one side you have stocks with new highs and on the other, you have stocks with new lows. What would you choose?

    This isn’t a trick question. If you follow the rule “buy low, sell high” you might think that some stock from a 52-week low list can be a great opportunity. You may consider it an unfortunate event and suppose the stock price will go up. Remember, you have only this information – highs and lows. Buying stocks at the bottom can be a good choice but you don’t have other important information about the company to make a proper investment decision. So, when making your decision based only on one info, you are gambling. You have no guarantees that the “bottomed out” stock will go up to the top or catch upward momentum. So, you will need more information to pick the stock from the list.

    But the dilemma may come the same with stocks from the 52-week high list. You might think these companies are successful and the progress will continue. Well, sincerely, you might be right. The company’s management is doing something good. There are a lot of chances for that stock to keep moving forward. So, you will make a slightly better guess than buying stock from the 52-week low list. 

    You see, the rule “buy low, sell high” isn’t always accurate. You don’t have any hint that stock from the bottom will ever come out.

    The 52-week high or low is just an indicator of potential buying or selling. To do that you will need more information.

    Trading based on the 52-week high

    What’s going on when stock prices are heading toward a 52-week high? They are rising, it is obvious. But some traders know that the 52-week highs represent a high-risk. The stocks rarely exceed this level in a year. This problem stops many traders from opening positions or adding to existing positions. Also, others are selling their shares.

    But why? The rise in the stock price is good news, right? Profit is growing, the future earnings outlooks are bullish. This can keep prices successful, at least for a week, sometimes for a month. If the news is really good and fundamentals show the strong result the stock breaks beyond the 52-week high, share volume greatly grows and the stock can jump over the average market gains.

    But how long can this effect last?

    The truth is (based on research, one important is Volume and Price Patterns Around a Stock’s 52-Week Highs and Lows: Theory and Evidence, authors Steven J. Huddart, Mark H. Lang, and Michelle Yetman) shows that the excess gains decrease with time. This research reveals that small stocks initially provide the biggest gains. But, they usually decrease in the following weeks. Large stocks generate greater gains initially, but smaller than small stocks do. So, excess gains that generate small stocks far pass these the larger stocks generate during the first week or month following the cross above the 52-week highs.

    This is very important data for traders and their trading strategy would be to buy small-cap stocks at the moment when the stock price is going just above the 52-week high. That will provide them excess gains in the next weeks, according to the research mentioned above.

    Intra-Day 52-Week High and Low Reversals

    A stock that makes a 52-week high intra-day but closes negative may have topped out. This means the price may not go higher the next day or days. Traders use 52-week highs to lock in gains. Stocks hitting new 52-week highs are usually the most sensitive to profit-taking. That may result in trend reversals and pullbacks.

    The sign of a bottom is when a stock price hits a new 52-week low intra-day but misses to reach a new closing 52-week low. This happens when a stock trades is notably lower than its opening, but rallies later to close above or near the opening price. This is a signal for short-sellers. They are buying to cover their positions.

    Bottom line

    To conclude, the strategy of buying stocks from the 52-week high list breaks the rule buying low. Yes, but hold on! The rule “not buy at high” can be applied to stocks that unnaturally bid up some kind of market over-reach. For example, the stock whose price has surged 30% over a single day. Drop it out! Neglect them.
    You want stocks with steady growth over a long time into the list. When you recognize such stocks, start to evaluate them. Examine every single detail about the company.

    Buying for bargains is a good strategy, but it is also a good cause for selling a stock at or near its 52-week low.

    Finding the winners can be trickier. One suggestion, start from the top and eliminate every stock with an unrealistic increase. They are on the top by mistake, trust us. Find stable winners. Do we have any valid proof that they will not continue to rise? Of course, they can.
    If you want to trade based on the 52-week high effect, keep in mind, it is most functional in the very short-term. The largest profits come from rarely traded stocks with small and micro-cap.

    Remember, the 52-week high or low represents the highest and lowest price at which a stock has traded in the prior year, expressed in weeks. It is a technical indicator. The 52-week high describes a resistance level and the 52-week low represents a support level. Traders use these prices to set the purchase or sale of their stock.

  • Tesla’s Claims Fall Short – Again

    Tesla’s Claims Fall Short – Again

    2 min read

    Tesla drops lawsuit against critic

    When ordered to produce evidence of alleged danger presented by a short-seller, Tesla withdraws its request for a court-ordered restraining order. Tesla’s claims fall short once again.

    Earlier this year Tesla has filed a request for a restraining order against a member of short-seller community TSLAQ known as “skabooshka”, real name Randeep Hothi, to the Alameda County Superior Court in Alameda County, California. In filing Tesla has claimed that Mr. Hothi has injured a security guard at Giga Factory in a hit-and-run incident, and also nearly caused a traffic accident while pursuing a test model of Model 3 during a test run on April 16. Upon being granted a temporary injunction by the court, Tesla was requested to provide audio and video recordings of those two incidents as evidence.

    Surprising turn-over

    But, in a surprise move the car producer has withdrawn request for the restraining order on July 19.

    In the letter to the court, Tesla’s lawyers have expressed the opinion that the request of the audio and video recordings of the incidents are an undue imposition on the privacy of their employees, stating that such materials contain personal and private conversations. They have expressed a belief that “restraining order against Mr. Hothi is necessary and appropriate to protect its employees at their workplace.” Further claiming that the company was forced to choose between employees’ safety and exposing their personal conversation to the public. Thus, the document states, the company has decided to pursue the safety of its employees “by other means”.

    And what those other means could be should make people worried, as the history of Tesla’s retaliation against its critics illustrates.

    Tesla’s claims fall short

    Shortly after the Reveal from The Center for Investigative Reporting has published a piece alleging that Tesla is under-reporting the work-related injuries, one of the CIR’s insiders have alleged retaliation. Said doctor alleged that a complaint to the relevant Medical Board was lodged against her, while also an anonymous call was placed to state’s Child Protection Service accusing her of negligence to her children and requesting that her kids be placed under the protective care of the state.

    But such false accusations look to be the modus operandi of Tesla when handling the critique.

    Tesla model 3

    Last year Ars Technica has published a story about the alleged attempt of a mass shooting at Giga Factory by a whistleblower Martin Tripp. At that time the Tesla representative has told Ars that they have received an anonymous call at Giga Factory by a male caller claiming that Mr. Tripp is “extremely volatile” and “heavily armed”. But according to the information provided to Mr. Tripp’s attorney and then to Ars the alleged call was made to Tesla’s call center in Las Vegas and then forwarded to Giga Factory’s head of security, Sean Gourthro. Gourthro then has texted to Story County Chief Deputy Tony Dosen that an anonymous female caller has alerted them that Mr. Tripp is en route to “shoot up Tesla”, per Story County Sheriff’s Office report. According to an in-depth investigation by Bloomberg, when police officers have tracked down Mr. Tripp they have discovered that he presents no danger for Tesla’s employees. 

    “He said he was terrified of Musk and suggested the billionaire might have called in the tip himself. A sheriff’s deputy attempted to cheer up Tripp and then called Tesla to tell the company that the threat, whoever had made it, was bogus.”

    Bottom line

    Since we wrote so many times that any news may have an influence on the stock price of some company, it will be interesting to make a comparison in stock price before and after incidents like this one. Do investors take care of how companies treat their employees? Is the company’s public outlook important for them? We will see. Today Tesla’s stock looks like this:

    Tesla stock target price: $890.00

    Current price: $255.68

    Stay tuned and follow the market