The Weekend Edition is pulled from the daily Stansberry Digest.
Having been in the financial-newsletter industry for several years, I've read many stock recommendations...
Some good... but most bad.
And unlike the good ones I'm now fortunate enough to read every day working at Stansberry Research, those bad ones seemed like nothing more than a "hunch"...
This brand of stock analysis often sounded to me like it was based only off a "gut" feeling or a few headlines. It often began with an interesting story or big-picture concept... but one that felt loosely connected to the recommendation on what to buy that month.
Sure enough, over the course of a year or two, many of the returns of these suspect "long-term" picks were terrible – some even losing double digits within weeks – without any suggestion in advance of the risks involved.
As one editor said to me, "It happens."
It's true... Nobody that we know of has a time machine or can predict the future. But there had to be a better way...
That's when "technical analysis" crossed our desk...
I happened to start collaborating with a brilliant technical analyst who worked with some of Wall Street's biggest firms. And my mind was blown.
I'm talking about the type of data-driven analysis that our resident short-term traders like Ten Stock Trader editor Greg Diamond and DailyWealth Trader editors Ben Morris and Drew McConnell use every single day.
While these traders might include a story for context, the meat of their issues includes detailed, multilayered numbers – in sports, they call them "analytics."
They explain things like price action, risk-reward ratios, support and resistance levels, Fibonacci math (it's cool... I promise), precise price targets, and how long it may take for a particular trade to play out – whether it's months, weeks, or days.
Traders can apply these methods to literally any sector or stock at any given time... But you don't need to worry about hunches, headlines, emotions, or parsing CEO comments or Wall Street analyst reports.
It's all quantifiable... which makes it particularly useful in volatile times when markets are swinging from highs to lows and back again.
For example, take a look at a couple of charts Greg shared with his Ten Stock Trader subscribers on May 18.
If you held shares of beaten-down General Electric (GE) this year, you would have been wise to use Greg's "Sell Zone" advice...
And you would have been just as wise to stick with tech giant Microsoft (MSFT) as it helped lead the Nasdaq Composite Index back to new highs over the past few months...
You'll also find common-sense qualifiers in Greg's updates – the Ifs and Buts...
For example, IF the Federal Reserve drops a few trillion dollars in the economy bucket, things might change quickly, and we'll need to adjust our expectations for the trade at hand.
In other words, as Greg explained recently, it's critical to trade the market you see today... not the one you want. And technical analysis can help you do just that.
For example, on Tuesday night, Greg wrote to his subscribers...
I'm focused on the uptrend in stocks.
As such, I'm looking at potential corrections and where they could end. This sets up more trading opportunities.
Lately, the corrections have been incredibly short.
With the Fed meeting tomorrow and stocks on a torrid run of late, I'm looking for areas of support.
Greg went on to describe a "support" level – which indicates more buyers than sellers – in the Dow Jones Industrial Average... It's around 26,300.
This 26,300 level in the Dow just happens to be around its 200-day moving average ("DMA"), a good measure of a long-term uptrend.
And when former "resistance" levels – which indicate more sellers than buyers – turn into support levels over time, that's a good signal of an uptrend in whatever index, stock, or asset you're looking at.
In other words, using technical analysis gives investors a reliable way to take into account the unexpected or predictable unpredictability of Mr. Market.
Of course, no system is perfect. There will be losses along the way... But the important point is you know precisely what you're risking ahead of time. As Greg put it in a pair of trade recommendations earlier this week, "We'll risk 100% to make over 100% on this trade."
And over time, the gains and the insight gleaned along the way can outweigh any of the losses. For instance, Greg has delivered at least one triple-digit winner every other month for at least two years, through bull and bear markets.
Using technical analysis makes sense for anyone interested in short-term trading. When it comes down to their goals, price – where you buy and where you sell – is all that matters.
But even for a longer-term investor, the "technicals" have a place in your toolbox...
We love capital-efficient stocks at Stansberry Research. Our editors believe they give you the best chance for reliable returns over the long term. We're not saying you should throw fundamental analysis out the window.
But our collection of services includes a lot of views, perspectives, and experiences. And there's room for more than one approach in an investor's toolkit. Famed American author F. Scott Fitzgerald is credited with saying...
The test of a first-rate intelligence is the ability to hold two opposed ideas in mind at the same time and still retain the ability to function.
In this case, understanding "what the chart looks like" can help you decide whether now or later would be a good time to buy or sell any number of assets that you already love... or that Wall Street hates.
And it's even better when you get one, two, three, or more indicators (all from different methods) all telling you the same thing.
The point is, the "numbers geeks" aren't being told to go sit in the corner of their Wall Street offices...
It's like in sports, advertising, insurance, social media, or any other industry.
Analytics and data-driven decision-making long ago entered the investment world. And they're influencing it every day.
I interviewed an All-Star pitcher from baseball's Baltimore Orioles earlier this year who had this to say about numbers-driven analytics: "It's here, and if you're not going to jump on board, you're going to miss it."
He said analytics don't necessarily change you as a player, but they can help tell you who you are as a player – what your strengths or weaknesses are – put measurable numbers to them and let you know if you were hitting your marks or not.
"Because the eye test doesn't always tell the whole story," he said.
It's the same thing in investing...
Number-driven algorithmic trading funds are a big part of every institutional trading house and can cause rapid circuit-breaker tripping swings in the market, like we saw during March's panic.
There's always so much fast-moving data in the world that it can feel impossible for an individual investor to keep up. But at the same time, it's important not to ignore the information that can be available to you...
And more important, that we already make available to you.
So what can you do?
First of all, you'll want to add technical analysis to your collection of tools and strategies. It allows you to get a data-driven outlook on stock movements during volatile times... instead of relying on hunches and gut feelings.
Second, you should find a guide who knows what they're talking about... like Greg.
He's a Chartered Market Technician – 1 in about 100 traders have this certification – with 15 years of Wall Street experience. When our publisher Brett Aitken hired Greg about three years ago, he was averaging $155,000 in profits per trade for a big-time firm.
Since COVID-19 first hit the headlines and upended the world, Greg's Ten Stock Trader subscribers have not only been getting his usual rapid-fire updates on the major indexes and leading sectors, along with big-picture outlooks... but they've been making more targeted trades, too.
In February – before everyone and their mothers knew about the company – Greg recommended a trade on Zoom Video Communications (ZM) that delivered a 45% return in a month...
In March, he called the bottom based on one market signal – the same one that he used to make $4.6 million on one trade back in his hedge-fund days.
And now, this indicator is pointing to a new opportunity – in a company that has already given his subscribers a chance at 126% and 197% gains.
Check out our recent presentation here to learn more. You'll not only hear about the opportunity to access Greg's latest trades and his market outlook, but you'll also get the chance to learn why there's a spot for technical analysis in any investor's toolkit.
All the best,
Editor's note: Greg's Ten Stock Trader has given subscribers a chance to profit during bull and bear markets... with some earning $3,180 to $8,625 on his trades. Now, thanks to this secret market signal, Greg has found a new opportunity for triple-digit gains that's just days away. Don't miss out on this potential multibagger... Get more details here.