Stock market commentary, analysis, insight and opinion of the RightLine Editors is available every Tuesday/Thursday evening & Saturday
afternoon. The following is excerpted from the:
September 18, 2018 - The RightLine Report
Notes From The Editor
Do you have a list of "favorite" stocks? Are there certain equities you watch every day, regardless of what the market is doing? If so, you're not alone. Even beginner traders with just a few months of experience will quickly develop an affinity for certain tickers. But did you know this can also help you become a better trader?
Imagine that you're highly familiar with five different stocks. You're well-versed on not only how the stock tends to move, but also the company itself. You know it like the back of your hand - everything from their core products/services to recent earnings history to all their latest news. Now imagine the advantage this information might give you when you're trading that equity.
Let's say that a biotech company is expecting a ruling from the FDA regarding a potential blockbuster drug - a real "make-or-break" scenario. Looking around the company's website, you see that they've already scheduled another series of trials for the drug. This would be a strong indication that the company is expecting government approval. On the other hand, if there's nothing planned for the drug, they may be expecting the worst. Savvy traders can read between the lines and position themselves accordingly.
This is a big factor in why stocks often suffer a "sell on the news" reaction. "Smart money" prices in likely events before they happen - whether it's an upside earnings surprise, a big contract, or anything else that has a substantial impact on the company. By digging deeper into a company's website - especially their investor relations section, which all publicly-traded corporations are required to have - you can uncover details that might impact a stock's direction before the news is actually announced.
One of Wall Street's biggest secrets is that just about anyone can be a reasonably good equity analyst. In this day and age of instant information, the playing field has been leveled quite a bit. You can sit in on the same conference calls as those institutional analysts. You can obtain the same information on news sites and corporate websites. So if you've got a few of those "pet stocks," make it a point to learn everything you can about them. Knowledge is power!
Here's to profits,
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