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Mastering the Stock Market: High Probability Market Timing and Stock Selection Tools by John L. Person

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CHAPTER 8

Scanning for Profits

The pure technician does not focus on news or fundamentals. The purist believes that the charts and technical studies represent the opinions of the market as a whole, which includes the fundamentalist. Those who are “in-the-know”—you know, the folks who may be buying ahead of earnings; a technician, for example—may uncover a hint of their positions or buying pressure, which may show up in the form of a positive reading either from volume or price action. In the beginning of trend phase, momentum changes can be subtle and hard to detect by just looking at names of companies and stock symbols and their closing prices as is listed on most data sources, including brokerage platforms or print media such as Investor's Business Daily or the Wall Street Journal.

With over 7,000 stocks listed on various exchanges, between the news media, industry trade reports, direct mail pieces, Internet, blog sites, friends, or family members touting a great stock to buy, how do you make an informed decision? Stocks that are launched on their initial public offerings (IPOs) can at times post highs that day only to trend lower for several weeks or months. Chapter 2 can give you an idea of what sectors make typical highs and lows, but as you know, it's no guarantee it will work every time. In fact, nothing presented so far will give you a guaranteed profit. At best, what we have provided are methods to give you an edge and to help prepare you for a trading opportunity, so ...

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