In the bearish version, which I call the Interest Rate Apocalypse, all of the inputs (earnings growth for the next five years and beyond, equity risk premiums) into value are held constant, while raising the treasury bond rate to 4% or 4.5%. Not surprisingly, the effect on value is calamitous, with the value dropping about 20%. While that may alarm you, it is unclear how the analysts who tell this story explain why the forces that push interest rates upwards have no effect on earnings growth, in the next 5 years or beyond, oron equity risk premiums. Higher inflation, over this period, is accompanied by higher earnings growth but also increases equity risk premiums and suppresses real growth, making its net effect often more negative than positive. An inflation-driven increase in interest rates is net negative for the boutique s, but a real-growth driven increase in interest rates is a net positive.
In fact, the scenario where interest rates go down sees a much bigger drop in value than two of three scenarios, where interest rates rise. With an inflation rate of 3% and an equity risk premium of 6%, the index value that you obtain is about 2133, about 20.7% below March 2nd levels. The index value that I obtain, with these assumptions, is about 2610, about 3.1% below March 2nd levels. The effect again is unsurprising, with value increasing proportionately. That higher inflation rate will translate into higher earnings growth, though the effect will vary across companies, depending upon their pricing power, but it will also cause T. Bond rates to rise. Higher real economic growth, on the other hand, by pushing up earnings growth rate and lowering equity risk premiums, has a much more positive effect on value. Sometime one of the indexes can be positive as the index are calculated by price weightage or capitalisation weight age, but breadth does not lie. 5. The market “knows” something you do not: Remember that the dividend yield for a stock shoots up almost always because the price drops, not because the dividend is increased. A limit order is nothing more than an order that says, “I’ll buy the stock for X dollars a share but won’t pay more.” When the stock hits that price, the limit order takes place for the price you set or lower, if the stock dipped lower before the broker completed execution.
The process also help to embed in your brain these setup patterns. If those patterns are present it dramatically improves the probability of trendy boutique following through. Below are the following financial stocks I am watching along with a few other stocks as well. Only purchase mutual shares and cash you are totally comfortable with. They may job individually along with you, supplying purchase advice and handling your stock portfolio. Accordingly, I intend to allocate a higher percentage of my portfolio to international stocks, especially US/HK tech stocks. First thing in the morning I obsessively study stocks that make 8% moves and 5 dollar plus moves in 5 days and study stocks up 80% plus from 52 week low. The stock trading advisory services make conscious efforts to ensure the security of the capital that has been deployed with them. The best part of doing it is , you will build your own knowledge and base your trading based on your own observation and your own derived rules based on what “actually” happens in a the market. Doing this daily everyday builds incremental expertise.
However, since RSI is approaching an overbought level there may be a chance of short correction and for now $6.50 level will be hard to break. Now that is a very valuable insight to improve our success rates with swing trades. The process of going through these past immediate winners helps us incrementally improve our trading as we gain better insight. That particular move we call momentum burst has certain unique dynamics to it and based on study of thousands of such past moves we have derived our trading scans and guidelines for entry, exit, risk, stops and setup selection. Studying immediate past winners tells you what is working in the market and what kind of setups to look for to find those kind of winners. As i trade two types of setups, one looking for big moves and another looking for short term moves, I focus my efforts on studying that timeframe and magnitude move.
In these trades I move my stops quickly once it makes 20% move. Because if you want to find 8 to 20% moves in 3 to 5 days, you must know thousands of such moves. Moves of 8 to 20% start from some kind of pullback or sideways moves. As a swing trader we want to focus on explosive short term moves of 8 to 40% in 5 days or 5 to 25 dollars in 5 days. It helps you to focus on most explosive part of a trend move. They are not up 3 days in a row before start of the move. The indexes have been up 5 to 6% at best this year, but we are already up several multiples of that with minuscule risk using such explosive moves. Businesses that defies common sense are best to be avoided. Some are high tight flags, some are double bottoms near top of the range, some are bottoming setups from 52 week low, some are part of range bound action.