HEY, WALL STREET: WHERE ARE ALL THE SELL
RECOMMENDATIONS?
Stock prices go up, and (as everyone knows after 2000) stock prices also go down. With this in mind, does it really make sense that over 90% of all analyst recommendations are the equivalent of "Buys" or "Strong Buys?" Of course not. So where does the independently minded investor turn for timely and unbiased research on stocks that are likely to FALL in price???
Sell recommendations are an endangered species on Wall Street. While the investment industry produces mountains of research reports every year, analysts seldom issue "sell" ratings on the companies that they follow. Therefore;, investors are starved for research on stocks to sell short or on which to buy put options.
The reason for this preponderance of predominantly buy side research can be traced to the workings of the brokerage industry. Most brokerage firms that publish research reports are also engaged in corporate finance or underwriting business for most of the companies that they follow. Brokerage research analysts are therefore very reluctant to publish negative opinions about their "client" companies. Doing so could tarnish their firm's relationship with the target company and jeopardize lucrative investment banking fees.
So where do investors turn for bearish stock research? The answer for subscribers to Active-Investor.com is the powerful technical analysis tools that are brought to the market. Technical analysis has been found to be an effective means of identifying stocks that are likely to drop in price. The reason is that certain technical systems can often provide early indications of selling by insiders and institutional investors. Waiting for negative information about a company to become widely disseminated often leaves individual investors feeling as if they were the ones left holding the bag after the larger investors on Wall Street have already sold a stock.
BEARISH STOCK RESEARCH
Bearish stock research is essential to any active investor wanting to adopt a "market neutral" trading strategy. Short selling (or buying put options)in the hopes that a stock's value will decline is not a familiar strategy to many investors. The risks associated with "selling short" can be high due to the use of margin, so Active-Investor strongly suggests that traders who are unfamiliar with the risks should consult an investment advisor about the added risks before attempting this strategy. But given the proper research and strict adherence to placing stop loss points, the potential for profits are just as high. Active-Investor uses a blend of sophisticated technical analysis tools to produce our bearish stock research. We go through a 4-step process before providing this information to our members each and every week.
| Step 1: | Studies have shown that the single most important determinant in the direction of a stock's price is the industry group or "sector" to which the company belongs. This is the step we refer to as the "top/down" portion of our system and helps to differentiate us from our competition. |
| Step 2: | We analyze over 4,000 companies to identify a list of stocks with the strongest bearish technical signals. This step represents the "bottom/up" element of our weekly buy and sell research. The average daily trading volume is usually at least 100,000 shares for stocks that make our featured list. The number of stocks in the list created in Step 1 is reduced by identifying which stocks belong to an industry sector also demonstrating bearish technical signals. |
| Step 3: | After applying the sector screen to the stocks with the strongest bearish signals, the remaining price charts are personally analyzed in order to select 10-12 stocks that are considered to have the most downside price potential over the next 4-8 weeks. |
| Step 4: | Finally, the research is compiled and presented to our members in an easy-to-read tabular format. This table is available to our members every week and contains stock symbol, company name, closing price, target price, and detailed information on the stock's bearish technical signals. |
Naturally, the bearish stock research is most helpful when the market indexes are headed lower. Because of this, subscribers often consult this research after reviewing the information on the Indexes/Sector page and the insight delivered in the Market Commentary page.
OUR BLEND OF TECHNICAL INDICATORS
Active-Investor.com utilizes a blend of highly sophisticated technical indicators for analyzing stocks. Below is a table showing the technical indicators and trading bands used in our research.
TECHNICAL
INDICATORS |
TRADING
BANDS |
Price
Volume
Accumulation
Distribution
Advance/Decline
Directional Movement
MACD
Money Flow
Relative Strength
Stochastics
Volatility |
Bollinger
Moving Averages
Exponentially Smoothed Averages
High/Low Points |
OUR INVITATION TO YOU
Please accept our invitation to review Active-Investor.com's weekly research for free, with no obligation, for 14 days. Take a moment now to register for your free trial. You will be enjoying the latest research before the next trading day begins!
SUBSCRIBING TO ACTIVE-INVESTOR
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