It is too easy to get involved with indicators and miss the forest for the trees. On this chart for example, is this a clean ‘sell' signal back a few days
ago? Is this stock now halfway through the selloff? What if the stochastics turns around just above the ‘buy' signal line – will it be a good buy signal?
Now, looking at the price chart itself with trendlines showing a clear up-trending channel, it is obvious that entering a long position when LGF fell back to the lower trendline and taking profits when LGF reached the area of the upper trendline would have made sense.
Further, the volume on many of the up-close days is well above the average volume level. Where LGF currently is strongly suggests a high probability of a rebound upwards and a low probability of a decline below 15.
The very large volume spike on November 9th was from an earnings report that greatly exceeded expectations, after four quarters of falling short of expectations. Lion's Gate has one of the top films right now – “The Twilight Saga: Breaking Dawn, Part 2”. It has currently grossed $268 million. There is reason to believe Lion's Gate may report very good earnings again in early February.
Seasonally, LGF has only 14 years of track record, but the next 16-week period has produced some impressive moves reflecting the fact major movies are
typically released around the holidays.
When LGF moves this time of year, it can move significantly. A trade matched to the high probability direction and 4-month timeframe, with a tight stop-loss in the low probability direction, is one possibility. LGF could also be traded just for a move back to the upper part of the channel.
High probability trading doesn't need to involve complicated indicators or systems. What works best is patience and perseverance. Look for combinations
that just make sense, like a movie studio whose stock is showing strength in December and has just released a popular film. Compare the stock's actions to
past earnings and similar time periods. And pass on the trade if everything doesn't line up.
Of course, there's much more you need to know and many more stocks you can capitalize upon each and every day. To find out more, click here: www.markettamer.com/seasonal-forecaster
By Gregg Harris, MarketTamer Chief Technical Strategist
Copyright (C) 2013 Stock & Options Training LLC
Unless indicated otherwise, at the time of this writing, the author has no positions in any of the above-mentioned securities.
Gregg Harris is the Chief Technical Strategist at MarketTamer.com with extensive experience in the financial sector.
Gregg started out as an Engineer and brings a rigorous thinking to his financial research. Gregg's passion for finance resulted in the creation of a real-time quote system and his work has been featured nationally in publications, such as the Investment Guide magazine.
As an avid researcher, Gregg concentrates on leveraging what institutional and big money players are doing to move the market and create seasonal trend patterns. Using custom research tools, Gregg identifies stocks that are optimal for stock and options traders to exploit these trends and find the tailwinds that can propel stocks to levels that are hidden to the average trader.
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