Building high-probability assets is the essence of sound investing.
We do this through a proven analytics process and, ideally, one that’s easy to follow and run around your busy lifestyle.
Unless you are paid to do analysis, in which case you are an analyst, I assume that you, the reader, are a busy, everyday person trying to build and maintain a portfolio that performs without any aspect of your give up lifestyle.
With the technology available today, this is 100% possible.
An argument for simple investing: technical analysis, or in other words, looking at charts to make your investment decisions ticks ALL the boxes for a no-compromise approach. It has a proven history dating back to the dawn of financial markets, is easy to learn, and requires minutes per week of screen time to build and manage a portfolio.
The trap most fall into and why they don’t see success is that they day trade or look at intraday time frames – 1 second, 15 minutes, 1 hour – to make their decisions. Quacks have gotten away with selling day trading as the sexy get-rich-quick way since the Internet’s inception. Buying this is why so many fail to meet their investment goals.
If you move your analysis to the higher timeframes – monthly, weekly and daily – you are opting for a more investing style and your fortunes will change drastically. I like to start with the monthly time frame to do my analysis, as this time frame provides a macro view of a stock’s past performance and how it is likely to perform in the future.
The perfect setup to buy a stock meets these criteria:
It has undergone good development in the past. Price action is trading above last year’s high. The volume is more than 1 million. The price is breaking out of a long-term area of consolidation.
Below is the monthly timetable for Deere & Company DE.
Deere & Co. Technical Levels: This stock has been in my portfolio since August 2020, when the price met the criteria above. The beauty of catching a stock that breaks out of a consolidation area in the long run is that it acts as a base for developing a trend. Just as strong roots grow a great tree, a consolidation base will enable a solid trend. The trend from August 2020 to May 2021 went from $180 to $400, a 125% move.
The eagles among you will notice that this month’s price action broke out after an 11-month consolidation period. Are we seeing early signs of the next trend to $500 and beyond? I will add connections as the trend develops.
3 Stock Ideas: Below I have the monthly timetable for three additional stocks that meet the criteria described above. I’m keeping a close eye on these at the moment and will add them to the portfolio once I’m more confident that we are indeed in a general bull market. As I’ve explained in previous articles, I look to the S&P 500 to determine market conditions.
1. Cincinnati Financial Corporation CINF
2. DTE Energy Co DTE
3. FMC Corp. FMC
As the saying goes, the longer the consolidation, the bigger the breakout. Under optimal market conditions, discovering trends driving a consolidation breakthrough is probably the most profitable way to invest.
On average, trend followers regularly appear at the top of the performance tables, while value investors are at best in the middle of the table.
This post 3 proven stocks preparing for the perfect entry
was original published at “https://www.benzinga.com/trading-ideas/long-ideas/22/03/26328816/3-proven-stocks-setting-up-for-the-perfect-entry”