In this week’s issue:

• Weekly Commentary
• Strategy of the Week
• Stocks That Meet The Featured Strategy

Stockscores Market Minutes Video
Some traders only want to look at the market once a week. You can do this by seeking stocks making good chart breaks on the three year weekly chart. This week, Tyler shows how to set up the Market Scan to find these stocks plus he provides his regular market analysis for the last time in 2013. View the video by clicking here.

Things You Must Do To Be Successful in 2014
2013 was a Beta year for the market. That means that the large cap stocks all went up and you made good profits if you simply owned the index. It was one of those rare difficult years to beat the market because the overall market did so well.

I expect that 2014 will require a lot more stock picking acumen. Investors are going to have to seek out the real leading individual stocks that can beat the market.

Here are five things that all investors and traders, whether long or short term, must do to beat the indexes in 2014.

Understand Reward for Risk
Most traders focus on the stock but you will be far more successful if you focus on the reward for risk profile of the trade. Risk is the difference between your entry and stop loss price. Reward is the difference between a profitable exit and the entry price. The tighter you can make your stop with lowering your probability of success, the higher the reward for risk ratio can be. Seek out trades that have a lot more upside potential than downside risk.

Focus on Abnormal Behavior
The best way to beat the market is to trade on inside information. Most of us don’t get quality inside information but it is not that hard to follow those that do. When there is significant fundamental change underway in a company, the stock will often trade abnormally. Prove it to yourself by looking at the stocks that made big gains last year. You will see that most of these market beating trends started with abnormal price action.

Learn to Read Chart Patterns
Most market beating stocks start with abnormal activity but not all abnormal activity leads to market beating trends. The important qualifier is the chart pattern. Stocks making abnormal activity out of predictive chart patterns have a good chance of going in to market beating trends.

Limit Losses, Let Profits Run
Imagine you do 10 trades. On five of them, you lose $100. On three of them, you make $100. On the final two, you make $1000 each. After 10 trades you have made a very good profit because you limited the size of your losses and let your profits run.

Ignore Public Information
Public information is useless because it is already priced in to the stock. It may be interesting, it may make you feel good about the stock that you own but it has no value to your investment decision. In fact, it may be destructive because we often fall in love with the public story, causing us to hold on to losing stocks with the “hope” that the stock will turn around. 

STOCKS THAT MEET THE FEATURED STRATEGY

1. T.HSE
Money is starting to flow back to the Energy sector, Husky’s chart is breaking out this week to four year highs after spending most of 2013 trading sideways below $32 resistance. Historical yield is 3.66%

2. T.PPL
I featured T.PPL earlier this week to readers of the Tradescores.com daily newsletter, it has continued higher since and looks likely to continue its long term upward trend after building a base for the past 7 months. Historical yield is 4.59%

References

• Get the Stockscore on any of over 20,000 North American stocks.
• Background on the theories used by Stockscores.
• Strategies that can help you find new opportunities.
• Scan the market using extensive filter criteria.
• Build a portfolio of stocks and view a slide show of their charts.
• See which sectors are leading the market, and their components.

   

  Disclaimer
  This is not an investment advisory, and should not be used to make investment decisions. Information in Stockscores Perspectives is often opinionated and should be considered for information purposes only. No stock exchange anywhere has approved or disapproved of the information contained herein. There is no express or implied solicitation to buy or sell securities. The writers and editors of Perspectives may have positions in the stocks discussed above and may trade in the stocks mentioned. Don’t consider buying or selling any stock without conducting your own due diligence.