Stock Market Cycles

Hello
Even during raging bull markets and the hottest stocks in play they always go through 6-20 week cycles. Everyone thinks even the strongest stocks in the best bull markets go straight up. But that’s not the truth. The stock always goes in cycles of about 6-20 weeks. This is why so many get caught out. They jump in too late and get out too late. You have to get in at the right time of the cycle and simply try to ride it out. We are already 7 weeks into this cycle so you really should be in your positions by now.

See the charts.
Momentum stocks we are in are about to get in:
CREE
MEE
CAAS
JOYG
X
GMCR
NTAP
BUCY

The basic of short selling in stock market

What is short-selling?

Short-selling is the sale of shares that the seller does not own at the time of trading. Despite being a long-standing market practice worldwide, short-sales have been the subject of considerable debate and divergent views in most securities markets.

The first thought popping up in your mind would be – where do these shares come from which you are selling without possessing them in your portfolio of stocks. These come from your broker/brokerage firm that lends you the shares in lieu of your investment as collateral. You short sell these shares but subsequently you have to close the short by buying back the shares from market and then return it to your broker/brokerage firm. You are also charged some interest for the loan of shares you have taken.

Looking at the flow of shares in above flowchart, one would ponder why to borrow shares for selling in market and then transfer them back to the lender? The logic behind shorting is very simple; earning profit margin. Let’s see how??

If you think a stock is overvalued and expect that the price would come down in future for sure; you would wish to sell the shares at current levels at higher price. So you borrow the shares and sell them at higher price. And when the stock actually falls as you had speculated; you buy it from market at lower price and return it to the lender and the difference between the selling price (higher) and buy price (lower) is what you earned in the deal. So at the end you must close the short by paying back the shares and this is called as “covering the short”.Concluding this, investors who anticipate fall in the stock price go short to take advantage of market fall. An investor can hold the short for as long as he wants but he is charged an interest as it is similar to a loan taken in the form of shares. Also if during the course of loan, the company declares dividend or rights issue, it must be paid to the lender who is the actual owner of shares because you are just a borrower.
Short selling is considered to destabilize markets directly or indirectly. In 2001, the stock prices crashed heavily owing to short selling by big operators after which SEBI banned it. After a gap of 6 years in December 2007 SEBI came up with updated norms of short selling to cover the loopholes and ultimately institutional investor were also permitted to short sell.
Concluding this, short selling no doubt gives you an opportunity to earn profit by taking advantage of downturn of markets, it might bring in huge loss to your investment if stock price moves up. Because in real sense, shorting is a bet against the current market trend. When stock is at current higher levels, you are expecting it to fall down and entering the arena. Speculation is what makes shorting a riskier job. So beware of the dark side of shorting before you actually go for it!

Stock Market Technical Analysis

In finance, technical analysis is a security analysis discipline for forecasting the future direction of prices through the study of past market data, primarily price and volume.

More and more new investors are coming to the market by diving into trading mainly focusing on technical analysis without paying attentions to the fundamentals. This is not a bad thing and I do not want to state that all of them are wrong. However, I consider that before starting stock market trading based on the trading signals generated by technical analysis results, the one should know what he/she can expect from the technical analysis.

First of all, technical analysis is not an exact since and none of technical indicators would guarantee that chosen trading vehicle will perform in desirable manner.

If you decided to use technical analysis as a foundation of your trading you should know that this is not an easy task to analyze the stock market. If it would be easy then everyone would be a winner. If somebody made $10,000 on the market that mean that somebody (or several traders) lost those $10,000. Only in pyramid business and bubble market number of winners exceeds the number of losers. Yet, you know what happened after - pyramids and bubbles always, sooner or later, collapse and in the end winning/losing balance is restored. The art of technical analysis is to be better than the other general population of traders.

If you just came to the market you should not expect that technical analysis or some magic technical indicator will make you rich in short period of time. As a rule those who came to the stock market with the purpose of become rich fast end up with empty pockets. If you have this idea in your head, then you are a gambler and it is better for you and for your budged if you go to a Las Vegas - at least there you will have more chances to win.

No matter how professional you feel in technical analysis, if you are novice trader be prepared to lose everything you decided to allocate for trading. If you have never traded before, it is a bad idea to take all your savings into your trading. If you only starting a trading use the same principle majority of smart people use when they go to Las Vegas - dedicate for trading the amount of money that you are not afraid to lose. Prepare yourself to the fact that most likely you will lose them. As a rule when people may take for instance $1000 with a thought that they are going to have just fun and most likely they will lose this money in exchange for fun. If you go to Las Vegas with other purpose then you are a gambler and you should stay home.

The same is when you do the first step on the stock market. Take $1000 or more (whatever you are not afraid to lose) with a thought that most likely you will lose these money, yet in exchange you will gain an experience and knowledge of trading. You will find out what a trader feels when he/she in the losing position, what does greedy buying and panic selling mean, why a trader expects to the last moment that the market may reverse in his/her favor, how once profitable position can became a loss because of greed, etc. If after that you are still confident that you want to go into real trading battle and you understand that technical analysis is not as easy and simple as it looks like, then welcome to the real world of hard work.

How to buy stocks for dividends

Investing in stocks that pay dividends is one of the best financial decisions an investor can make. These investments not only provide an opportunity to increase net worth from rising share prices, they also can help supplement an investors income for many years. As long as an investor is diligent about selecting these investment choices, there is little associated risk over the long term. Stock Dividents can be attractive as a source of steady income, while you still get to retain the stock shares for further returns. There is also a perception that companies which can afford to pay dividends are generally more stable.

Finding the best stocks that pay dividends requires research and patience. Anyone can simply invest in the highest yielding securities blindly based only on the current payout. That investment strategy, however, will eventually cost the investor a lot of lost earnings and time. Searching for the best quality companies is a safer and more stable option for the long term investor. So how can an investor find the best dividend paying stocks?3 Ways to Find Stocks that Pay Dividends

Here are 3 popular strategies for identifying quality stocks that pay dividends.

List of Dividend Paying Stocks -
There are many organizations that publish lists of dividend paying stocks that offer some good investment ideas. For example, the S&P 500 Dividend Aristocrat list is published once per year which contains stocks with a strong history of dividend increases. A company must have raised their annual dividend distribution consistently for at least 25 years.

Stock Screen -
The best dividend stocks can be filtered out by identifying a set of criteria to look for. Most online discount brokers and financial websites offer stock screen tools that can be used to narrow down the search for stocks that pay dividends. Income investors typically set their criteria using data like dividend yield, dividend payout ratio, P/E ratio, etc.

Financial Websites and Blogs -
There are plenty of places to look for dividend paying stocks on the internet. The blogging community offers several different options and analysis which can help investors identify potential opportunities. Just remember that most of these sites offer biased opinions on investments, so due diligence is required.

Final Thoughts
There are many investment choices when it comes to stocks that pay dividends. Some of these stock choices make for very poor investments. On the other hand, there are plenty of blue chip dividend stocks that are safe and secure and can be wonderful investments. Filtering out the poorly run companies from the best dividend paying stocks can be difficult, but is necessary for long term success.

Plan before investing in stock

Since there are risks in investing in most cases, you need to have an investment strategy prepared before you get your money to work for you. It is like a game where you won't know the outcome for sure until it has been decided and most of the time you need a winning strategy. Much like in investing, you will need a winning strategy to be successful.

Having a plan on how to invest your money in various investment vehicles serves as your strategy. You investment strategy will help you achieve your financial goal in time. You must choose from a number of investments from different investment vehicles. The stock market has as one of those investment types have numerous type of stocks from various companies which you can choose to put your money in.

It can become very confusing and difficult if you don't have enough knowledge and haven't yet learn enough since there are so many investment types to choose from. The investment strategy you will develop together with your investment style and risk tolerance should make all the confusion and difficulties be at minimum. If you are new to investing in general, working closely with a good financial planner should be a great benefit to you before making any investment. They should be able to guide and help you create your investment strategy to achieve your financial goals all within the bounds of your risk tolerance and investment style.

It's a waste of time and money to invest without a strategy to reach a specific goal. It is important that you know where your money is going and what your money is doing before you give it away before you expect it to come back with some returns. Always have a plan and a goal before doing anything.

Plan before investing in stock

Since there are risks in investing in most cases, you need to have an investment strategy prepared before you get your money to work for you. It is like a game where you won't know the outcome for sure until it has been decided and most of the time you need a winning strategy. Much like in investing, you will need a winning strategy to be successful.

Having a plan on how to invest your money in various investment vehicles serves as your strategy. You investment strategy will help you achieve your financial goal in time. You must choose from a number of investments from different investment vehicles. The stock market has as one of those investment types have numerous type of stocks from various companies which you can choose to put your money in.

It can become very confusing and difficult if you don't have enough knowledge and haven't yet learn enough since there are so many investment types to choose from. The investment strategy you will develop together with your investment style and risk tolerance should make all the confusion and difficulties be at minimum. If you are new to investing in general, working closely with a good financial planner should be a great benefit to you before making any investment. They should be able to guide and help you create your investment strategy to achieve your financial goals all within the bounds of your risk tolerance and investment style.

It's a waste of time and money to invest without a strategy to reach a specific goal. It is important that you know where your money is going and what your money is doing before you give it away before you expect it to come back with some returns. Always have a plan and a goal before doing anything.

What does "Above The Market" means

Above the market refers to a strategy used in stock trading in which the investor makes trades only when the price of a security reaches a point somewhere higher than its current level. Both buy and sell orders may be made in this way. The three most common types of above the market orders are a buy stop order, a buy stop-limit order, and a sell limit order. Traders who use this strategy on buy orders are betting on the momentum of the price jump to continue to spur the price upward.

There are many strategies used to play the stock market, but most are variations of the buy-low, sell-high strategy that most investors quote as a motto. Except when it is used to sell stock, trading above the market flies in the face of this motto, as an investor who uses it to buy stock will be buying high. Investors using this strategy attempt to find a level where they can trust that the upward movement is a trend rather than a fluke.

One type of above the market order is a buy stop order. In this type of stock trade, an investor instructs his broker not to buy a stock until it reaches a certain price above where it currently stands. For example, if a stock is trading at $50 US Dollars (USD) per share, the investor may place a buy stop order at $60 USD per share. If the price reaches that level, then the investor makes the purchase. Should the stock fail to reach that level, then the investor does nothing.

A buy stop-limit order is an above the market order often used in conjunction with this. At times, an investor may want to ride the momentum of a stock only so far, fearing that at some point the stock may level out and cause the price to fall. Using the example above, the investor may put the buy order at $60 USD per share but put a limit at $65 USD per share. That means that the buy order will be in effect at $60 USD per share but will be canceled once the price reaches $65 USD per share.

The sell limit above the market order falls in line with the typical stock strategy that holds that investors should sell stocks at a high price. A limit order means that the order is not executed until a certain level is reached, which differs from a market order, which is executed immediately. An investor holding shares of a stock at $25 USD per share may put a sell limit order on the stock once it reaches $35 USD per share. At the point when the stock reaches that price, the investor will sell the shares.