Auto Sector Stocks: investor resolution ideas for 2012
As a trader, I review a lot of stock charts, like the weekly chart of the Dow Jones US Autos & Parts ($DWCAUP), which implies I look for patterns and repeatable similarities as well as differences of price action. That’s my personal research niche. Nonetheless, I also research many news and views by specialists about the economy, which is not my niche. Even there, I believe every trader has to have a method.
As the primary auto secor stock writer for Torquenews.com , I get quite a few letters. Problem is, I cannot legally advise on what to buy or sell; and I wouldn’t if I could. I treat stock purchases like religion; meaning, it’s private. Besides, following someone else is seldom in your best interest. Education, yes, blind following, no. What is in your best interest as an investor is to think fully and act fully on your own. That requires education and dedication. I hope the following resolution ideas help.
1) Develop a method to track the trend bias of the general market: I paid dearly for that advice. The mentor that I was assigned was very clear that trading against a trend bias was a clear violation of economic sanity. Fact is, only large hedge funds have the cash and the fortitude to stomach large drawdowns that naturally come with trying to be a contrarian.
Some people use a pay system like Investools or Vector Vest to know if the light is green, red or yellow. There is a cheaper way, though: use moving averages. The market majors are the 20-day, the 50-day and the 200-day. On the longer term, I prefer the 150-day, because I have witnessed its success via Carter Braxton Worth on CNBC’s Fast Money.