tyler bollhorn - market perspectives

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1、BottomFishingBuyingStrategyConceptBottomfishingisthequestforstocksthatareinexpensiverelativetopreviouslevels,butshowsignsthatthebargainisgoingtoendsoon.Findstocksthatareashowingabreakfrompessimism,anincreasedlevelofconfidencethatthestockisundervalued,and

2、signsofoptimismforthefuture.Filteringforthesesituationsgivestheinvestorashortlistofcompaniestoperformtheirnecessaryduediligenceonbeforespeculatingonachangeintrend.BackgroundBuyingastockthatisinalongstandingdowntrendcanbeasdangerousassteppinginfrontofafre

3、ighttrain.Ittakestimeforstockstoreversetrends,andbuyingwhatseemtobebargainscanbeacrushtoyourportfolio.However,bargainhuntingcanbeprofitableifthetimingisright.Toeffectivelybottomfishbeat-upstocks,youhavetoenterwhentherearesignsthatthedownslideisslowingand

4、amovebackupwardisimminent.Marketpsychologytakestimetoturnaround.Whenbottomfishing,wewanttofocusonstocksthathavesufferedaselloffandarecheaprelativetowheretheyoncewere.However,wewanttoalsolookforsignsthatmarketpsychologyisturningfavorableonthesestocksandth

5、attheyarereadytoheadhigheragain.Thisstrategyfocusesonthreestages:Stage1–abreakfromtheshowofpessimismStage2–ashowofconfidenceStage3–ashowofoptimismStage1isessentiallyabreakingofthedowntrend.Ifwedrawalinealongthetopofthedecliningtrend,wehavedefinedthedownt

6、rend.Abreakofthetrendariseswhenthestockcanbreakupwardandthroughthatdecliningtrend.Chart1-hereweseeabreakaboveawell-defineddowntrend.Thisdemonstratesabreakfromthepessimismthathasprevailedforacoupleofmonths.InStage2,wewanttoseesignsthatthereisconfidenceint

7、hebreakfrompessimism.Themarketneedstoshowresiliencethatthedowntrendisindeedslowing,andthatthepotentialforanuptrendisreal.Aconsolidationfollowingthebreakisagoodshowofthis,andismoresignificantifitasatalevelhigherthanthepreviouslow.Thisisreferredtoasarising

8、bottom.Copyright2000.ThispublicationisthepropertyofStockscores.comandmaynotbereprinted,rebroadcastordisseminated,inwholeorinpart,withouttheexpresswrittenconsentofStockscores.com..Chart2–thisstockhasbrokenthedowntrendandisn