Commentary
In This Week’s Issue:
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Traders’ Edge – Graphite Stocks
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September Webinar – The Tools of Stockscores.com
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Stockscores’ Market Minutes Video – Understanding Breakouts
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Stockscores Trader Training – How to Not Lose Sleep Over Your Investments
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Stock Features of the Week – Gold Miners
Traders’ Edge – Graphite Stocks
Graphite miners have been one of the hot areas on the junior markets in the past few years. With TSLA building its massive battery plant, there will be strong demand for graphite since it is an important component in batteries. Here is a quick run-down of the Canadian listed Graphite stocks that I am aware of:
V.ZEN (Stock Forum) – chart is pretty ugly, breaking down through support. Deposit in Ontario.
V.ALP (Stock Forum) – lower grade deposit, newly listed, watch for a break of the pull back
V.NRT (Stock Forum) – Mexico, small annual production, resistance at $0.10.
V.NGC (Stock Forum) – good jump recently, now in a pennant, watch for a break higher. Lower grade but near production if they can raise capital.
V.LLG (Stock Forum) – building optimism, needs to break through $0.90. Good grade and deposit size in Northern Quebec.
V.FDR (Stock Forum) – past producer now looking to restart. Small deposit in Europe. Good upward trend in to resistance at $1.20.
V.GPH (Stock Forum) – large high grade deposit in Alaska close to shipping channel. Has had an overhang of stock from recent financing but now stabilizing. Needs to break through $0.145.
V.ERA (Stock Forum) – early stage and newly listed, needs liquidity, watch for a volume spike.
I bought V.GPH at $0.14 last week, think it has good potential to get back to $0.20 in the next two months, fundamentals are compelling, chart looking like it can turn soon. Also watching V.NGC closely for a break from the current pennant pattern.
September’s Free Webinar – The Tools of Stockscores.com
During this webinar, Stockscores.com founder Tyler Bollhorn will show you the tools of Stockscores and how your portfolio can benefit from their use. Even veteran users of the site are likely to discover things that they never knew about what you can do with Stockscores.com. This is a free webinar. Register at:
https://attendee.gotowebinar.com/register/327138055163086593
Stockscores Market Minutes Video
Many investors look for price breakouts as signals to buy but most are not worth trading. This week, Tyler discusses a couple of things to consider before buying a breakout.
https://youtu.be/w414YXMMG74
How to Not Lose Sleep Over Your Investments
Emotion is the enemy of every trader.
Our emotional attachment to money is what causes us to lose our discipline, to take big losses, to not let our strong and profitable trades run higher. It causes us to own too many stocks in one sector or fall in love with a stock that will only hurt us. Letting emotion in to our trading decisions is a fast way to insomnia.
The volatility of the past 5 years and the relative underperformance of the stock market over the last 13 years has caused many investors to simply abandon the stock market. In doing so, they have been left out of one of the strongest Bull markets in history. Not for rational reasons but because of the fear of losing has been too strong.
The perception is that the stock market is too risky, many investors don't like the potential for a sharp sell off that can destroy their portfolio in a very short time period. The collapse of the stock market in 2008 has given many a form of post-traumatic stress disorder, leaving them on the sidelines when it has not made sense to do so.
The stock market may be volatile at times but that is not what determines risk. Risk is how you respond to the volatility, how you manage the potential size of your losses. The stock market is not risky, the people that play it are. It is how you deal with price volatility that determines risk.
If you want to sleep well while invested in stocks, you need to have a plan for managing risk. The notion that you can buy some "good" companies and forget about them is outdated and reckless.
Here are my essentials to being invested in the stocks and sleeping well:
Plan to lose. When you buy a stock, know the price level where the stock market will have proven you wrong. Learn how to determine where a stock's support price is and if the stock closes below that level, realize that the market is telling you that something is probably wrong at the company. Get out.
Know your tolerance for risk. How much are you willing to lose on any one stock trade? If you risk more than this amount, you will get emotional. Take the difference between the entry price and the stop loss price and divide that in to your risk tolerance to determine how many shares to buy. If you are buying a stock at $10 with a stop loss point at $9 and you are willing to lose $500 on any one trade then you should buy 500 shares.
Don't obsess. You don't need to watch your stocks constantly, if you are position trading then only look at the once a day or even once a week. You only need to check to see if your stock has given an exit signal, obsessing over every gyration will make you emotional and lead you to make mistakes.
Have a written plan. You must write down your trading rules. When will you buy, when will you sell, how will you manage risk and how will you review your positions. Keep the plan simple but concise enough that there is no room for interpretation.
Stick to your plan. Your plan should be based on strategies that you have tested and believe in. Deviating from the plan means you are going in to areas that have not been tested and that puts you closer to being a gambler. Gambling traders may win in the short term but in the long term they lose.
Remember that trading stocks is as risky as you make it. Not having a plan with rules for limiting the size of your losses leaves you exposed to big losses if the market corrects sharply. With loss limits and discipline, you should never be the victim of a major market correction.
Features
Gold mining stocks have been doing better than Gold as companies improve their economics while the stability in Gold gives investors some comfort. Despite the big drop in Gold today, many stocks in the group still have good long term turnaround charts. Here are two to consider.
GFI (Stock Forum) broke its long term downward trend last week, doing so from an optimistic consolidation pattern which sets it up for a reversal of the long term trend. Support at $4.10.
T.ORE (Stock Forum) has been building upward momentum for a few months and broke through resistance last week, setting up for the next leg in the upward trend. Support at $0.65.
