Stockscores Weekly Perspectives: Bat and Balls – AMX – MDSO

Posted by Tyler Bollhorn - StockScores

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Screen Shot 2017-02-28 at 6.55.40 AMIn this week’s issue:

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

 

 

Stockscores Market Minutes – Avoiding Bias
Humans can do a good job of screwing up trades by letting their emotional bias in to the decision making. This week, I discuss that, my market analysis and the trade of the week on AKRX. Click Here to Watch
To get instant updates when I upload a new video, subscribe to the Stockscores YouTube Channel

Trader Training – Bat and Balls

Here is a test.

If a bat and a ball cost $1.10 together and the bat costs $1 more than the ball, how much is the ball?

Do you have your answer?

If you are like the majority of people, you will say that the ball costs $0.10. That is the wrong answer since that would make the bat cost $1.10 ($1 more than the ball) for total cost of $1.20.

The right answer is that the ball costs $0.05 and the bat $1.05 for a total of $1.10.

The reason most people answer this question wrong is not because they lack the intelligence to get it right. The problem is that we are trained to answer questions quickly and that leads us to be impulsive. Instead of thinking, we get lazy and say the first thing that comes in to our mind.

Many people trade the market the same way.

Particularly when trading a hot and fast moving stock, we are inclined to not think about the trade but instead act impulsively. We fear missing out on the opportunity and will make the trade for the wrong reasons. That is the law of upticks; people lose their ability to think when a stock is moving up quickly.

That is why it is important to right down your trading rules. Traders often scoff at this idea, a simple check list of rules seems childish and unnecessary. Yet, how often have you gone back to look at a losing trade that you did and realized that the trade did not fit your requirements?

Think this approach is only for fast moving day traders? Sadly no, even long term trades, those with lots of time to consider, can succumb to impulsive decision making.

We are emotional beings with an emotional attachment to our money. When considering a trade, it is easy to see what we want to see and act impulsively because it feels good to think about the profit potential. Having that check list of rules is good whether you are making a fast paced day trade or a long term position trade.

I ran the Stockscores Simple Weekly market scans for the US and Canada and looked through a lot of charts. There were not many I liked, probably because we are sitting at the cusp of the first and second quarters of the year with investors waiting to see how earnings are going to look before making their moves. However, here are two that I think have some promise for the months ahead:

1. AMX
AMX has broken its downward trend and is turning higher from a rising bottom, a good pattern for a trend reversal. Support at $13.90. 7/10.
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2. MDSO
MDSO broke through $60 resistance last week that has held up for over three years. Support at $55. 7/10.
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References

 

  • Get the Stockscore on any of over 20,000 North American stocks.
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  • 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.