The stocks I have had the most success with are the ones where institutional accumulation is so obvious, you can see it across the room. If from ten feet away you look at a chart you left up on your monitor and the first thought you have is “wow, someone is loading up on that stock!”, then what are you waiting for?
In my September 21st newsletter, sent out before the market open, Lamar Advertising's chart caused me to say “…Today it made another advance, on significant volume, out of a consolidation area. Not only is the ‘stair-stepper’ pattern one of my favorites, but so are periodic, almost regularly spaced high volume bars. To me this is evidence one or more large players, some hedge fund perhaps, either likes what they see, or know a little more about this company than you or I (or the rest of the public) do. Individual investors do not make patterns like this (well, maybe briefly after Jim Cramer highlights a particular stock). It is institutions making regular purchases to build a position. That is the primary mover of stocks, and identification of the footprints of such moves is one of the best odds-increasing techniques you can master.“
I like to use black-background charts with volume bars colored to up or down-close days. This really makes the volume patterns stand out. This is the chart of Lamar that caught my attention:
Step back from your monitor and look at this from several feet away. Knowing that the volume bars are colored green on up-close days, and red on down-close days, what conclusions would you have drawn from this chart?
Lamar is up 37.8% from that September 20th close, and six months later is continuing the ‘stair-stepping' on strong volume. From several feet away, is your opinion any different?
If you trade options to take advantage of the leverage they offer, you know what the returns could have been with a stock that moved 37% over 6 months.
Keeping track of stocks with strong seasonal patterns regularly produces trade candidates aspiring to similar success (a smart institutional trader will keep coming back to what worked in the past). Lamar's chart caught my attention because it was on my watchlist due to a strong seasonal track record.
Armed with a list of stocks with strong seasonal track records, try my '10 feet away' analysis technique. And if you don't have experience with options, which can not only enhance the returns but can also lower the risk, then consider option training and/or mentoring.
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, type in 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.
Also on Market Tamer…
Follow Us on Facebook