Tim Reazor
Chief Investment Strategist
NorAm Asset Management
I want to talk to you this evening (I write my newsletter in the evenings and it is published the next morning) about your process for finding leading stocks. I’m often asked what leads me purchase some stocks while passing on others. It all comes down to my setups and my process.
I have a process and you should too. My process is a checklist. Yours doesn’t have to be a checklist, but you should have a written plan of how you will operate in the market.
My process starts with screening. I screen stocks everyday. You and I may be different traders and investors. Some of you screen for growth, others for value, while others screen for income. Whatever you’re looking for, no matter how you define leadership, you need a set process to find you next winner.
For those readers who know me or have heard me speak, you know when I do my heavy lifting. Sunday Mornings. I do most of my screening for the next batch of potential winners on Sundays. I’m relaxed, I’m drinking coffee and I run my customized and standard screens.
Once I have a pool of stocks from my screens to work with I start to skim… just like when you’re skimming an article, I’m skimming for chart patterns. I am able to skim only charts patterns because my screens are already ferreting out the top fundamental stocks.
Once I winnow down the pool to 10 or 20 patterns that I like, I print them out. I write notes on my charts. I write critical information such as buy points, Fibonacci retracements, stop loss points and other notes that I might forget during the upcoming trading week.
Once the grunt work and heavy lifting above is complete, I typically pick what I think are my five best setups. I now have a trading plan for the upcoming week. I always like to have five ideas at the ready. This allows me to direct in my actions with the market instead of reacting to the market and the news of the day.
To recap… These are the steps I take at the start of every week to help ensure my success.
Screening,
Skimming
Charting / Industry Grouping
Trade Plan
This isn’t foolproof. All the work in the world won’t stop a stock from going down or a market reversing. The point to the process is put myself in the best position to win. And when that moment comes when I have to decide whether to sell and take a loss small or sell to maximize a gain I rely on my plan. The plan and the process take the emotion out of investing.
I can tell you with certainty that when I skip any steps in the process I’m not as sharp, and I’ve either lost money or left money on the table.
I’ve found that I have to plan to be successful in the market.
By defining a process for stocks, bonds and commodities while adding the markets direction I can add a level of predictability and consistency to my portfolio growth. You can do this too. If you want to learn how please join me on Thursday June 26th at 7 PM. I’ll be teaching you two specific strategies that will help you grow your account.
Seating is limited. If you’d like to attend please click this link to RSVP – http://noramassetmanagement.com/workshop/
To see my watch-list of stocks for this week please watch this video – http://noramassetmanagement.com/videos/weekend-video-update-9/
I hope this helps you!
Best Regards,
Tim
The information presented is for educational and entertainment purposes only. Opinions and information expressed are based upon information considered reliable. However, factors are constantly changing and should not be relied upon. You need to do and verify your own research.
Moreover, no reader or listener should assume that any information or discussion presented serves as personalized investment advice from NorAm Asset Management, Inc. or from any other investment professional, and is not an offer of solicitation for the sale or purchase of any specific securities, investments, or investment strategies. You need to have your own, individual investment advice suitable for your personal situation.
Investments involve risk and unless otherwise stated are not guaranteed.
With geo-political events taking center stage of late I was asked today if it’s time to get back into bonds.
Before we can make a decision we need to examine two charts.
This first chart is of 30-year treasury futures. What I’ve highlighted is the relationship between price and volume. As you can see bonds moved higher on higher volume on Thursday and Friday of last week.
What I find interesting is that after a weekend of troubling news that volume actually decreased as 30-year treasuries moved higher. If the market was panicked or worried volume for these bonds would have soared higher today.
Now let’s take a look at TLT which is the bond ETF. Most investors don’t buy futures on bonds. They typically use TLT as their investing vehicle of choice.
Just like the chart above TLT moved higher on Thursday on higher volume, but actually declined on Friday. Be careful to note on Friday how TLT closed above the 21-day exponential moving average.
On Monday after a weekend of strive overseas in Iraq and Ukraine TLT did close higher, but volume was lacking. This notes the second close about the 21-day EMA, which could signify a shift in trend to the upside.
So what’s the plan?
The more adventurous could start to build a small pilot position in TLT. As they say risk happens fast. If you’re looking for some downside protection TLT is a fine choice, and in full disclosure, we own it but at a lower entry price. With that said I want to see how bonds play out after Wednesday’s FED announcement. This could be a head fake by bonds and I want to be judicious in initiating any new “bearish” type plays.
By defining a process for stocks, bonds and commodities while adding the markets direction I can add a level of predictability and consistency to my portfolio growth. You can do this too. If you want to learn how please join me on Thursday June 26th at 7 PM. I’ll be teaching you two specific strategies that will help you grow your account.
Seating is limited. If you’d like to attend please click this link to RSVP – http://noramassetmanagement.com/workshop/
To see my watch-list of stocks for this week please watch this video – http://noramassetmanagement.com/videos/weekend-video-update-9/
If you missed this week’s “Your Money” Radio Program, you missed a lot. I covered my rules based investing that I didn’t have time to delve into during the video. You can access the podcast by clicking this link – http://www.thewallstreetshuffle.com/category/podcasts/
I hope this helps you!
Best Regards,
Tim
The information presented is for educational and entertainment purposes only. Opinions and information expressed are based upon information considered reliable. However, factors are constantly changing and should not be relied upon. You need to do and verify your own research.
Moreover, no reader or listener should assume that any information or discussion presented serves as personalized investment advice from NorAm Asset Management, Inc. or from any other investment professional, and is not an offer of solicitation for the sale or purchase of any specific securities, investments, or investment strategies. You need to have your own, individual investment advice suitable for your personal situation.
Investments involve risk and unless otherwise stated are not guaranteed.
Tim Reazor
Chief Investment Strategist
NorAm Asset Management
You can’t be in everything. You have a limited amount of investable funds. So what do you focus on? I say four or five of the highest quality stocks. I define high quality as stocks that beat 98% of all stocks for fundamental and technical prowess. I’ll also add the all stocks are bad unless they are going higher in price.
You’ll never see me produce a list of the best grocery stocks, the best solar stocks, the best whatever. Who cares what the best grocery stock is. I care what stocks have the best chance of going higher.
By defining a process for stocks and adding the markets direction I can add a level of predictability and consistency to my portfolio growth. You can do this too. If you want to learn how please join me on Thursday June 26th at 7 PM. I’ll be teaching you two specific strategies that will help you grow you account.
Seating is limited. If you’d like to attend please click this link to RSVP – http://noramassetmanagement.com/workshop/
To see my watch-list of stocks for this week please watch this video – http://noramassetmanagement.com/videos/weekend-video-update-9/
If you miss this week’s “Your Money” Radio Program you missed a lot. I covered my rules based investing that I didn’t have time to delve into during the video. You can access the podcast by clicking this link – http://www.thewallstreetshuffle.com/category/podcasts/
I hope you have a successful investing week!
Best Regards,
Tim
The information presented is for educational and entertainment purposes only. Opinions and information expressed are based upon information considered reliable. However, factors are constantly changing and should not be relied upon. You need to do and verify your own research.
Moreover, no reader or listener should assume that any information or discussion presented serves as personalized investment advice from NorAm Asset Management, Inc. or from any other investment professional, and is not an offer of solicitation for the sale or purchase of any specific securities, investments, or investment strategies. You need to have your own, individual investment advice suitable for your personal situation.
Investments involve risk and unless otherwise stated are not guaranteed.
Tim Reazor
Chief Investment Strategist
NorAm Asset Management
I’m reaching into the NorAm Asset mailbag this evening (I pen this newsletter in the evenings – it is sent out early the next morning) to answer a question that many dear readers seem to have.
Should I sell my airline stocks?
Let’s focus on two highfliers (pun intended) that I’ve talked about on our radio show or newsletter – American Airlines (AAL) and Southwest Airlines (LUV). Let’s look at AAL first.
As you can see from the daily chart below AAL looks broken. It has gapped down and sold off on high volume. These are two very big red flags. AAL has also closed below the 21-day exponential moving average. This is another bad sign.
Now let’s look at the weekly chart of AAL. As you see things aren’t so bad. We’ve come down to the 8-week exponential moving average and found support. This is a very good sign! Is the volume still high for the week? Yes.
More on AAL in a moment and what you might consider doing if you own shares or options.
Now let’s take a look at LUV. We’ll look at both the daily and weekly charts. It’s the same story… things look dramatically worse on the daily and somewhat better on the weekly.
What’s the strategy?
I’m not a seller at the moment. If I’m holding shares of AAL and Luv I need one more piece of information to confirm a sell signal. If we close again below the 21-day exponential moving average then I’m a seller and I’d look to re-enter once price stabilized.
If I’m a holder of June options; I own a decaying asset. Time is not on my side. I’m most likely a seller tomorrow. If AAL or LUV go down I’m selling, if they are flat I’m selling and if they go up I got a gift and I’m selling into strength. I’m making that decision most likely at the end of the day. If AAL and LUV drop dramatically at anytime tomorrow I’d cut them right away. I don’t want to enter options expiration week (next week) behind the preverbal 8-ball praying for a run higher to save a position.
Owners of options that don’t expire next week (meaning you have June 4’s or greater) you’re fine. The trend of the stock is still higher and intact. If we broke the upward trend I’d then sell and wait for my next set-up.
I hope today’s newsletter helped.
Best Regards,
Tim
The information presented is for educational and entertainment purposes only. Opinions and information expressed are based upon information considered reliable. However, factors are constantly changing and should not be relied upon. You need to do and verify your own research.
Moreover, no reader or listener should assume that any information or discussion presented serves as personalized investment advice from NorAm Asset Management, Inc. or from any other investment professional, and is not an offer of solicitation for the sale or purchase of any specific securities, investments, or investment strategies. You need to have your own, individual investment advice suitable for your personal situation.
Investments involve risk and unless otherwise stated are not guaranteed.
I think crude oil has plenty of room run. It’s an opinion based on the charts. I’ve drawn some lines of resistance on a daily chart of crude futures. Even though I think crude can move all the way up to re-test the $111/$112 price level I want to see how crude behaves at resistance. If we consolidate at these levels, like we are right now, then I’m bullish and believe higher prices are in the cards. If we hit the levels and revert lower on higher volume then the move up to prior highs becomes difficult to achieve.
I pay attention to how stocks and commodities behave at certain levels because it helps me decide how I’m going to handle a trade. If we utilized USO, the crude ETF, to invest in crude I would want to know before getting into the trade what would get me out – or at least harvest some profits or minimize loses. The levels drawn along the way help me manage the position or take off risk.
I typically use Delta 70 calls with a 45-60 day time frame when I’m trading USO. I’ve taken the liberty of drawing the levels that we’ve used on the crude chart and placed them on the USO chart. Now I can see what a move will look like on USO if we move up to $112 on crude.
What would shake me out of this position? A close below the 8-day exponential moving average would most likely consider the validity of this trade.
I hope today’s newsletter helped.
Best Regards,
Tim
The information presented is for educational and entertainment purposes only. Opinions and information expressed are based upon information considered reliable. However, factors are constantly changing and should not be relied upon. You need to do and verify your own research.
Moreover, no reader or listener should assume that any information or discussion presented serves as personalized investment advice from NorAm Asset Management, Inc. or from any other investment professional, and is not an offer of solicitation for the sale or purchase of any specific securities, investments, or investment strategies. You need to have your own, individual investment advice suitable for your personal situation.
Investments involve risk and unless otherwise stated are not guaranteed.
Tim Reazor
Chief Investment Strategist
NorAm Asset Management
The Chinese search engine Baidu (BIDU) is entering a buy range. The stock, like others I’ve discussed lately such as United Rentals and Diamondback Energy, is in the upper 2% of the market fundamentally and technically. BIDU also sports a surging relative strength line and a positive up/down volume ratio.
I’ve wanted to write about BIDU for a few weeks but I’ve held off. I was waiting for institutional buying to drive the stock price higher. That kind of buying came into the stock on Monday for the first time in weeks. You should also note on the chart how low the volume is when the price pulls back. This demonstrates just how much conviction there is by the majority of shareholders. If BIDU was a weak stock with weak shareholders volume would escalate higher as price falls. Very few folks are currently selling when price dips which signifies conviction. You need this precise price and volume action for stocks to move higher.
Scaling into BIDU is appropriate at these levels. In an upcoming class I will cover how to properly buy and sell your stocks. I’m curious to see how BIDU acts at prior resistance of $189. If the stock acts well at this level I’m looking for a move to the $202 price level.
I hope today’s newsletter helped.
Best Regards,
Tim
The information presented is for educational and entertainment purposes only. Opinions and information expressed are based upon information considered reliable. However, factors are constantly changing and should not be relied upon. You need to do and verify your own research.
Moreover, no reader or listener should assume that any information or discussion presented serves as personalized investment advice from NorAm Asset Management, Inc. or from any other investment professional, and is not an offer of solicitation for the sale or purchase of any specific securities, investments, or investment strategies. You need to have your own, individual investment advice suitable for your personal situation.
Investments involve risk and unless otherwise stated are not guaranteed.
Tim Reazor
Chief Investment Strategist
NorAm Asset Management
GMCR declined about 8% on Monday. Most days when this happens to a stock I’d tell you to sell. For the moment this case is different. GMCR lifted off on rumors during the last hour of trading on Friday. Today those rumors were believed to be unfounded and GMCR came back to earth. I want you to focus on box I’ve outlined on the chart below. Look at the support GMCR received today. This is impressive.
GMCR had every opportunity to undercut this constructive consolidation and it didn’t. GMCR still possesses the attributes of a potential leader. Here’s my piece from last week. I cover in great detail the facts about GMCR. http://noramassetmanagement.com/articles/leading-off-a-stock-nearing-a-buy-point/
What would change my mine about GMCR?
If GMCR undercuts this constructive consolidation my opinion would change in regards to GMCR. That doesn’t mean you short it. It means that the set needs more time percolate and there is no need to waste capital while it brews.
If you’re interested I’ve created a video that covers critical levels for the markets, gives you my watch-list complete with buy-points and I also cover weekly credit spreads. I highly recommend that you watch it. I sincerely hope that the video helps you. Please pass the video along to anyone you think may be interested in the markets. Here is the link – http://vimeo.com/97572447
A few more notes… I cover exactly what will shake me from this market and how to react if the market tumbles on this week’s “Your Money” Radio show. If you have a moment please let me know what you think. I want the show to be a resource for you. Your comments help me make the show just that – a valuable tool for successful investing.
http://www.thewallstreetshuffle.com/category/podcasts/
You can listen to the show live on Saturday’s at 10:00 AM – just click this link and bookmark it – http://www.iheart.com/live/1190AM-4276/?autoplay=true
You can also listen via the iHeart Radio app. Simply download the app to your smartphone and search for 1190 AM Dallas. There is even an alarm you can set to remind you of when our show is on.
If you want to come into my office and learn about credit spreads send me an email. It would be a pleasure to meet, bond and talk stocks together – tim.reazor@NorAmAsset.com
I often talk stocks and markets on twitter – you can follow me by searching for my handle – @TJReazor
I hope today’s newsletter helped.
Best Regards,
Tim
The information presented is for educational and entertainment purposes only. Opinions and information expressed are based upon information considered reliable. However, factors are constantly changing and should not be relied upon. You need to do and verify your own research.
Moreover, no reader or listener should assume that any information or discussion presented serves as personalized investment advice from NorAm Asset Management, Inc. or from any other investment professional, and is not an offer of solicitation for the sale or purchase of any specific securities, investments, or investment strategies. You need to have your own, individual investment advice suitable for your personal situation.
Investments involve risk and unless otherwise stated are not guaranteed.
Tim Reazor
Chief Investment Strategist
NorAm Asset Management
This uptrend is for real. There are always economic factors that can derail any uptrend, but for now the move higher is legitimate.
Why do I have conviction? Volume. Volume has started to come into the rally. Leading stocks – not junk, think the top 2% of the market – are breaking out. These are crucial facts not to be ignored.
What stops this uptrend?
Inflation. Rising inflation will most likely stop this market from moving any higher. We have both the Producers Price Index Report and Consumer Sentiment Reports coming out this Friday morning. I’ll be keeping a close eye on how the market digests these very important numbers.
What’s my plan for the week?
To continue to buy leading growth stocks and generate weekly income from credit spreads.
I’ve created a video that covers critical levels for the markets, gives you my watch-list complete with buy-points and I also cover weekly credit spreads. I highly recommend that you watch it. I sincerely hope that the video helps you. Please pass the video along to anyone you think may be interested in the markets. Here is the link – http://vimeo.com/97572447
A few more notes… I cover exactly what will shake me from this market and how to react if the market tumbles on this week’s “Your Money” Radio show. If you have a moment please let me know what you think. I want the show to be a resource for you. Your comments help me make the show just that – a valuable tool for successful investing.
http://www.thewallstreetshuffle.com/category/podcasts/
You can listen to the show live on Saturday’s at 10:00 AM – just click this link and bookmark it – http://www.iheart.com/live/1190AM-4276/?autoplay=true
You can also listen via the iHeart Radio app. Simply download the app to your smartphone and search for 1190 AM Dallas. There is even an alarm you can set to remind you of when our show is on.
If you want to come into my office and learn about credit spreads send me an email. It would be a pleasure to meet, bond and talk stocks together – tim.reazor@NorAmAsset.com
I often talk stocks and markets on twitter – you can follow me by searching for my handle – @TJReazor
I hope today’s newsletter helped.
Best Regards,
Tim
The information presented is for educational and entertainment purposes only. Opinions and information expressed are based upon information considered reliable. However, factors are constantly changing and should not be relied upon. You need to do and verify your own research.
Moreover, no reader or listener should assume that any information or discussion presented serves as personalized investment advice from NorAm Asset Management, Inc. or from any other investment professional, and is not an offer of solicitation for the sale or purchase of any specific securities, investments, or investment strategies. You need to have your own, individual investment advice suitable for your personal situation.
Investments involve risk and unless otherwise stated are not guaranteed.
Tim Reazor
Chief Investment Strategist
NorAm Asset Management
I’m often asked how to find buy points and when is the time to strike in a stock. Before we find a buy point we have to find a stock. For me it starts with a stock that is in the top 2% of the market. That means the stock is superior fundamentally and technically to 98% of all the stocks in the market. I’m not talking about OTC stocks in this 98%. I also get excited about increasing mutual fund ownership.
With the criteria for selecting a stock briefly covered let’s talk buy points. Generally you want to find the chart pattern, find the high point and set a point slightly above the high point as your buy point. Why? This clears you through resistance.
An even easier way is to look to the left-hand side of the chart, find the previous point of resistance and set the buy point.
Why Wait for a Buy Point?
You want to wait for a stock to break through a buy point before buying or you can slowly start to accumulate your position because you want to take advantage of the laws of supply and demand.
A stock breaking though resistance on higher volume does a couple of things for an investor. It demonstrates to you that there is demand from institutional investors. You need this for sustained moves higher. Stocks that are pushing to higher prices on higher volume also demonstrate conviction. Institutional investors don’t pay higher prices for stocks unless they think they are going higher. I could speak for hours on this topic. I used to do just that when I taught classes, but I’ll keep this brief. I’ll leave you with this last thought on buying on a stock breaking out.
As stocks are moving higher on volume, breaking through resistance with the backbone of superior fundamentals and technicals you begin to notice a phenomenon taking shape.
The phenomenon that is happening is that you begin to notice very few sellers on the move higher. Yes, there are some down days, but no real sellers of note on these days. How do I know? When a stock is falling in price, if there are scant sellers volume will be light. These are the red bars on my charts in the volume area. This means that when the stock was weak, on a particular day or week, no one was selling. Conversely when a stock is moving higher you’ll want to see institutional volume (green bars on my charts) surge higher.
When you see surging demand (volume) and price moving higher this means that there are few sellers. This also means that investors that want to buy shares will have to pay up. Why? Think about it. If you held shares in a stock that was moving higher what would get you to sell your shares? The answer? Somebody offering you a significantly higher price then what you paid for your shares. Always remember it’s a stock marketplace where supply and demand rules the day.
Let’s take a look at a few examples. Here’s a chart of Apple that brilliantly demonstrates the laws of supply and demand. I’ve circled the higher volume that coincides with higher prices for you.
Now let’s take a look at a stock I’m watching, Keurig Green Mountain (GMCR) Look at the recent price action. Can you spot the green volume bars driving prices higher? Also, notice how volume looked when prices pulled back recently. It’s very low. The tight trading action this week on lower volume is also very constructive. Of note the last institutional selling volume on a weekly chart occurred the week of March 28th of this year. I’ve labeled the buy point for you on the chart to help you drill home the points mentioned above.
I’m not buying GMCR as of this moment and neither is the shop. I’m waiting for my signals; I’m watching and stalking this potential leader.
A few more notes… This isn’t a recommendation. To learn how to scale in and size your positions properly for this market listen to the podcast from my radio show that I co-host with Danny Stewart. I cover this topic extensively.
http://www.thewallstreetshuffle.com/category/podcasts/
You can listen to the show live on Saturday’s at 10:00 AM – just click this link and bookmark it – http://www.iheart.com/live/1190AM-4276/?autoplay=true
You can also listen via the iHeart Radio app. Simply download the app to your smartphone and search for 1190 AM Dallas. There is even an alarm you can set to remind you of when our show is on.
If you want to come into my office and learn about credit spreads send me an email. It would be a pleasure to meet, bond and talk stocks together – tim.reazor@NorAmAsset.com
I often talk stocks and markets on twitter – you can follow me by searching for my handle – @TJReazor
I hope today’s newsletter helped.
Best Regards,
Tim
The information presented is for educational and entertainment purposes only. Opinions and information expressed are based upon information considered reliable. However, factors are constantly changing and should not be relied upon. You need to do and verify your own research.
Moreover, no reader or listener should assume that any information or discussion presented serves as personalized investment advice from NorAm Asset Management, Inc. or from any other investment professional, and is not an offer of solicitation for the sale or purchase of any specific securities, investments, or investment strategies. You need to have your own, individual investment advice suitable for your personal situation.
Investments involve risk and unless otherwise stated are not guaranteed.
Tim Reazor
Chief Investment Strategist
NorAm Asset Management
Leading Off…This Oil Stock is on the March
I want to expand upon the oil theme I’ve been talking about for awhile. Whether you’ve followed me on the USO trade, want more energy exposure or simply missed the move until now; Diamondback Energy (FANG) might be for you.
In full disclosure we’re in FANG here at the shop. We’ve been in since around the $70 level. The question to ask is why? FANG currently sports all the attributes of a leading stock. It’s in the upper 2% of the market. It’s so strong fundamentally and technically on an apples to apples comparison FANG is beating 98% of all stocks traded (I don’t count or care to count OTC) for it’s fundamental and technical prowess.
FANG is also in the top20 industry sub-groups and trades over a million shares a day on average – all important factors for me.
On top of FANG’s rising 1.2 up/down volume (which I like – I want 1.0 or greater) the stock also sports an accelerating relative strength line. Add up all of the above factors and add in the accelerating growth and FANG is downright sexy.
Have you missed the move? No. FANG is about 2% above a $76.80ish buy-pt.
A few more notes… This isn’t a recommendation. To learn how to scale in and size your positions properly for this market listen to the podcast from my radio show that I co-host with Danny Stewart. I cover this topic extensively.
http://www.thewallstreetshuffle.com/category/podcasts/
You can listen to the show live on Saturday’s at 10:00 AM – just click this link and bookmark it – http://www.iheart.com/live/1190AM-4276/?autoplay=true
You can also listen via the iHeart Radio app. Simply download the app to your smartphone and search for 1190 AM Dallas. There is even an alarm you can set to remind you of when our show is on.
If you want to come into my office and learn about credit spreads send me an email. It would be a pleasure to meet, bond and talk stocks together – tim.reazor@NorAmAsset.com
I often talk stocks and markets on twitter – you can follow me by searching for my handle – @TJReazor
I hope today’s newsletter helped.
Best Regards,
Tim
The information presented is for educational and entertainment purposes only. Opinions and information expressed are based upon information considered reliable. However, factors are constantly changing and should not be relied upon. You need to do and verify your own research.
Moreover, no reader or listener should assume that any information or discussion presented serves as personalized investment advice from NorAm Asset Management, Inc. or from any other investment professional, and is not an offer of solicitation for the sale or purchase of any specific securities, investments, or investment strategies. You need to have your own, individual investment advice suitable for your personal situation.
Investments involve risk and unless otherwise stated are not guaranteed.
