Too Much Volatility Volatility is uncertainty. Virtually

New Post Public Reply Private Reply Replies (0) Message Board

Jul 16, 2012 at 8:47 AM

Too Much Volatility
Volatility is uncertainty. Virtually every good chart pattern that I use to find winners demonstrates a break out from low volatility. The narrower the range before the breakout, the more important the breakout becomes. If the stock's price is moving all over the place before it makes a break through resistance then there is a much greater chance that the breakout is false and will likely fall back. Ignore stocks that have a lot of price volatility before the break out.
Not Enough Reward for the Risk
A stock can go two ways, up or down, after you buy it. If the upside potential is not enough to justify the downside risk, then you should ignore the opportunity. I like stocks to have at least double the upside potential for the downside risk. That way, you don't have to be right even half of the time to make money, provided you are disciplined of course.
Lack of Optimism
Fundamentals do not matter. It is the perception of Fundamentals that matter. If investors are not showing some optimism about a company's prospects then it is likely that they are not paying any attention to the company's fundamentals. Look for rising bottoms on the chart as an indication that investors are optimistic, if there aren't any, leave the stock alone.
No Abnormal Behavior
The stock market is efficient most of the time. That means that you can not expect to consistently beat the stock market because all available information is priced in to the stock and your success at predicting new information can only be random. To beat the market, we have to look for break downs in market efficiency. I find that the best way to do this is look for abnormal behavior in the trading of a stock because it implies that there is significant new information playing a role in the stock's performance. I don't consider any stock that lacks abnormal behavior in its recent trading.
Too Far Up
The higher a stock goes, the riskier it becomes. I don't like to chase stocks higher. If I look at a 6 month chart of a stock and it has made more than two steps up, I don't consider it. A one day run of substantial gains is not a concern; I want to ignore stocks that have been in upward trends for some time. Look for stocks that are breaking from periods of sideways trading, not up trends.
Lack of Liquidity
The more often a stock trades, the easier it is to get in and out of it. Stocks that are not actively traded tend to have wider spreads between their bids and asks and it can be difficult to move in and out of the stock. Don't consider stocks that don't trade every day and they should trade at least 50 times a day but more is better.
Mixed Messages
I always try to look at a stock's chart on more than one time frame. If the message is not the same on both charts, I leave them alone. When day trading, look at the daily and intraday charts. When position trading, look at the daily and weekly charts.
Any time you think a stock has great potential, give this list a look and see if any of these factors show up. If so, it may be a good idea to move on and look for something else.

Newer

Older

Scroll down for more posts ▼

Top 10 Most Recent News Articles

Global Mayors Dialogue 2026: Ningbo Leads in Urban Ideas

New Waves in City Collaboration Get this: from November 2 to 5, Ningbo, a key city nestled in east China's Zhejiang Province, is rolling out the red carpet for the 2026 Global Mayors Dialogue. Nearly 200 influential figures zooming into this seaside city isn't just for some aimless chit-chat. At the core, the theme is "Openness and Connectivity for Shared Opportunities."...

Thunes, UnionPay Revamp China Payments with $10K Daily

Unveiling a New Era for Cross-Border Payments Thunes is shaking things up, unleashing a fresh wave of possibilities for moving money into China's mainland. In a strategic twist, Thunes has teamed up with UnionPay International, aiming to transform the cross-border payment experience. With a potent combo of bank-grade security and hefty daily transaction limits, this...

China-Malaysia Youth Dialogue: Tackling Ocean Challenges

Building Bridges Across Waters These aren't the afternoons of trading stocks, folks—this one dives into the depths of the ocean and the tumultuous waters between China and Malaysia. October 30 saw the China-Malaysia Youth Ocean Dialogue take place at the China Media Group Sanya Studio, bringing together some sharp minds from both nations, tackling something that goes...

Isinwheel's 2027 E-Mobility Pitch: Beyond Resolutions

Embracing the E-Mobility Shift Here we are at the tail end of 2026, and isinwheel is riding high on the wave of New Year resolutions with their hefty e-mobility lineup. It's not just about buying the gear—it's about tackling our reliance on gas-guzzlers with electric scooters and bikes as our trusty steeds. "Reduce car trips? More greenery in your commute? These aren't...

SICO Snags $1.6B in New Investor Mandates for 2026

SICO Makes Waves with Massive New Business Wins Right out of the gate at the Gateway Gulf 2026 Forum, SICO's announcement of a whopping $1.6 billion in new business mandates had even the seasoned pros raising an eyebrow or two. There's nothing like a sweet billion-dollar figure to kickstart the day, huh? This isn't small change we're talking about; this is a tidal wave of...

Context Labs Unveils AI Distillery for Enterprises

Rethinking AI with Sovereignty in Mind A bouquet of tech buzzwords lands on every investor's doorstep with the unveiling of Context Labs' latest contraption. We’re talking about the AI Distillery™, which promises enterprises a way to run sovereign AI systems by keeping data in-house. Now, if you’re nodding along to the buzz, let's cut through the clutter....

Navigating Underinsured Motorist Coverage Woes

When the Rubber Hits the Road: Coverage Gaps Ever been in a fender bender and found out the other driver’s insurance barely covers a dent, let alone a serious crash? Believe me, it's no picnic. Chuck Clark from HelloNation digs into this with a deep dive on underinsured motorist coverage, or UIM for short. It's an eye-opener—especially if you're assuming your auto...

Shenzhen's Theme Song Unveils APEC 2026 Vision

A Harmonious Prelude to APEC China 2026 Ever experienced an anthem that captures a city's pulse? That's what Shenzhen's latest creation aims for as it gears up for APEC China 2026. The Publicity Department of the CPC Shenzhen Municipal Committee, alongside Shenzhen Media Group, has crafted something more than just a tune. This is 'Meet You Where Wonders Bloom', a melody...

Potatoes vs. Candy: Halloween's Spuddy Surprise

When Halloween rolls around, you expect rabid kids clamoring for candy corn and chocolate bars. But this year, Idaho threw a spud into the sweets machine. Idaho's Potatoes Steal the Show In an unexpected twist, the Idaho Potato Commission ran a zany experiment on Halloween: kids had to choose between their beloved Halloween candy and a genuine Idaho potato. Imagine the...

Nanchang Expo Showcases Future of Aviation and Space

Aviation Dreams Take Off in Nanchang Not every day you see an expo spanning 30,000 square meters focused on aviation, especially where East meets innovation—Nanchang, the beating heart of Jiangxi Province, China, is where it's all happening this time around. October 31, 2026, saw the city launching not rockets but the 2026 Nanchang Aviation Industry Expo, and folks,...

Top 5 Most Recently Viewed Articles

Celebrating Innovation with the AI2025 Awards and Conference

TiE South Coast Unveils Inaugural AI2025 Innovation Awards Recipients of the AI2025 Innovation Awards embody the pinnacle of achievement in AI and real-world leadership, making a significant impact within the Greater San Diego area. These distinguished individuals will be acknowledged during the TiE South Coast Tectonic Shifts AI Conference. A Celebration of AI Excellence...

AI Pilot Zones: Catalysts for a Technological Renaissance Artificial intelligence is redefining the landscape of technology and industry, leading many countries to establish AI pilot zones. This strategic move aims to harness the growing momentum within the AI market and foster breakthrough innovations, transforming the way businesses operate globally. The Rise of AI and...

Citi Upgrades Zions Bancorp Price Target Amid Rising Earnings

Insights on Zions Bancorp’s Financial Performance Citi has recently revised its outlook for Zions Bancorp (NASDAQ: ZION), raising the price target to $54.00 from a previous target of $48.00, maintaining a Neutral rating for the stock. This decision comes on the heels of the bank’s improved performance, particularly in relation to its near-term net interest income...

A. O. Smith's Leadership Transition: A New Chapter Begins

A. O. Smith Announces Key Leadership Changes A. O. Smith Corporation (NYSE: AOS) has initiated an important transition within its leadership team that is set to guide the company into a new era of innovation and excellence. Recently, the Board of Directors declared that Kevin Wheeler will shift from his current position as chairman and chief executive officer to become...

Catalyst Pharmaceuticals Implements Major Share Buyback Plan Catalyst Pharmaceuticals, Inc. (Nasdaq: CPRX), a biopharmaceutical company dedicated to creating novel treatments for rare diseases, has launched a strategic initiative by announcing a share repurchase program worth up to $200 million. This decision was made clear in a recent statement from the company’s Board...