Stock Exchange: Long-term (Energy) And Short-term (Finance And Software)

Every trader has a method linked to a time frame. Our group has some new ideas, but the members are sticking to their guns on some positions.

Long-term viewpoints emphasize an economic rebound, with materials and energy stocks leading.

Short-term methods show opportunities in financial stocks and software.

Review

Our last Stock Exchange discussed contrarian trading – why it is admired and how to do it intelligently. The group suggested three ideas. If you missed it, you will enjoy the topic and the ideas.

Market Tech Take

I hope to do something along the lines of a weekly review of important technical indicators. Our own key indicator, the Market Health Index (MHI), remains positive. Watch this space! Suggestions about your own favorite indicators are most welcome. If you have something good, we will run it on our special universe. You will get a result that you cannot see elsewhere.

Let’s turn to this week’s ideas.

This Week—Best Ideas Vary with the Time Frame

Holmes

This week I’m buying Discover Financial Services (DFS) a Credit Service company in the U.S. (65.30).

This one looks a little tricky. This stock languished in mid to high 50’s for a long time before establishing a new range in the mid 60’s to low 70’s. I’ve been watching this name pull back for a while and when I sense it is bottoming I jump in. I admit this pick make me nervous. I would be inclined to bail out if drops below 63.50, but I’m hoping it can revisit the recent highs of 73.

My biggest worry is whether that rally in that stock from 57 to 73 was real buying, establishing a new range to accumulate and not some low-volume short covering based on who knows what information that isn’t in the charts. My best protection is a tight leash on this puppy, and a willingness to bail on any new weakness.

J: Tight leash on the puppy? I thought you favored dog emancipation!

H: I do. It is just an expression that humans use.

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The Stock Exchange does not have all the answers, but it provides good ideas and a stimulus for your own trading.

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