The often choppy summer months and the thick of earnings season are often a tough time for investors and traders. They struggle to decide whether to take any action before their stocks report earnings.
Deciding when to sell is a difficult decision for most traders and investors. Beginning traders often go through a vicious cycle. They often start by selling too late as they liquidate on weakness and give up too much of their profits. On the next trade they tend to over compensate by selling too early and then often beat themselves up as they have gotten out too early.
When to Sell is the title of a book by Justin Mamis, an excellent technical analyst, who may not be well known to many of you. This is just one of the excellent books he has written and that can be found on Amazon.
He started in the markets just after the Korean War and in the 1970s founded the Professional Tape Reader with Stan Weinstein who later took over this publication. Their newsletter inspired me to delve into technical analysis as my father was one of their subscribers. Though I have never had the honor of meeting Justin, I met Stan several times and he was kind enough to sponsor me for the Market Technicians Association.
As it turns out, Justin just published the last issue of the Mamis Letter on June 30 of this year (see Bloomberg interview). There are many pearls of wisdom and one which I found especially inline with my thinking is that "The value of technical analysis in the stock market is to reduce risk."
Neither Justin nor Stan are fans of computerized technical analysis as they feel that it is best to keep your analysis as simple as possible. In fact, Justin manually updated his stock charts, which I agree, does give you a much better feeling for the market. In today's lesson, I want to discuss three technical factors that I focus on before a stock reports its earnings.
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