Stock Exchange: Climbing The Wall Of Worry

Review

Our previous Stock Exchange asked whether your trades fit your style, and reviewed how this can help improve your success. If you missed it, a glance at your news will show that the key points remain relevant.

This Week: Climbing the Wall of Worry

It’s been a powerful recovery since the depths of the financial crisis over 8 years ago, and the S&P 500 hit another new all-time high this week.

However, the recovery has not been as perfectly smooth as many seem to think. It has been the fear and bumps along the way that continue to create attractive opportunities. And even though market wide volatility (as measured by the VIX) is near all-time lows, there are plenty of stock-specific trading opportunities.

This week’s Stock Exchange expands on how our models trade on market fear, both generating profits and protecting against losses. We highlight several specific picks from our models, and we also dig in to the methodology. All three of this week’s picks highlight how we are able to buy in the face of fear, such as implementing mean reversion trades, buying smaller dips within larger rising channels, and simply using momentum strategies to climb the wall of worry. And of course, we impose strict risk management techniques along the way.

Expert Picks from the Models

This week’s Stock Exchange is being edited by our frequent guest: Blue Harbinger (also known as Mark D. Hines). Blue Harbinger is a source for independent investment ideas focused on value and income opportunities.

Holmes: This week I bought Discovery Communications (DISCA). This stock’s dip over the last month is the sort of set up I like to see. From the chart below you can see it is below its 50-day and 200-day moving averages. However, it has attractive upside over the next six weeks.

Blue Harbinger: Interesting pick, Holmes. As you know, Discovery is global media company providing content across multiple distribution platforms, including television, websites, digital distribution arrangements and content licensing agreements. Can you give us little more color on why you like it?

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The Stock Exchange does not have all the answers, but it provides good ideas and a stimulus for your own trading.

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