Hi everyone,
Last year, I had a blog in regards to applying the VectorVest simple technique. The blog post was entitled “How To Make Money With VectorVest – Using the Bascis Well!”
CLICK HERE TO SEE THIS PREVIOUS POST
In this blog post, I wanted to revisit the VectorVest simple technique: Finding smooth left to right price patterns with rising earnings. As an extra check this time round, I also checked to ensure the Earning Growth Rate (GRT) is positive!
Once again, this technique proves very successful in a rising market. Remember, the key is to apply this technique only when the market is in an uptrend.
To recap this technique again, we apply VectorVest simple as follows:
1. What to Buy
Build a WatchList of stocks that have smooth left to right price patterns, risking earnings and check RV (long term price appreciation), RS (how safe a stock is, a fundamental indicator), RT (the technical indicator of a stock) and VST (fundamental and technical combined indicator) .
2. When to Buy
Now that you have the portfolio put together, it is time to identify when it is time to enter in and buy the stocks – applying the GLB/RT Kicker Timing signal or the confirmed signal. Before placing any trade – ensure that your stocks in question continue to meet 1. per above
3. When to Sell
Once you have bought your stocks, apply the 4 steps to protecting profits: Volatility and direction, RT < 1, Price < 40DMA and REC=SELL
Click on the link below to see this technique applied in the last confirmed up – that being 14 December 2016 and run through to current date (2 February 2017 per time of this post).
CLICK HERE TO SEE THE LATEST DEMONSTRATION OF VECTORVEST SIMPLE
Regards,
Russell.
Great videos Russel, thank you!
Applying the 4 steps of protecting profit did not work for GMA for me. The reaction for the positive report (+42% profit) is a big surprise to me. What is the next step – sell before XD or collect at least the dividend?
HI Eva,
Yes, I had a look at GMA.AX – the 4 steps did not work there – as it fell away so hard after disappointing with its results – that effectively all 4 warnings came at once and the stock was heavily sold down. Sometimes we may not get the 4 warnings in a timely manner – they may be upon us all at once!
However, here are some additional things we can do:
Check out the EPS for GMA – it had been on a steady decline since August 2016 – never a good sign. Also, if you graph the GRT (earnings growth rate) – it too has been on the slide – up at 30% in March last year – and now at 2% – with a steady and consistent slide to get to the 2% currently – so the slide was defiantly taking place in a consistent manner for us to be aware of. So in summary – if in doubt also do the following:
1. Pay special attention to stocks with falling earnings – EPS
2. Pay special attention to stocks with GRT declining
If you see falling earnings and a GRT getting lower and lower – you may simply want to move to cash rather than take the 4 steps approach. You can always get back in when earnings start picking up.
I see per the announcement today – Gross Written Premiums fell 24.8% compared to the previous period. In addition, profit was down over 10%. We could see that well in advance with the falling EPS and GRT figures – as they build in a forecast.
Last point – I see GMA is not optionable. So you could not have purchased a put option giving you the rights to put the share to the market at a guaranteed price. If you have a share that you cannot buy a put option on – and you are seeing falling earnings, GRT etc. taking place – it could sometimes be a good idea to go to cash and wait to re-enter once earnings are going back up (EPS) and GRT is growing again. Otherwise, if you wanted to stick it out – to collect a dividend, a put option could have been something to consider in regards to protecting the downside.
Applying the 4 steps and per what I have noted above – one would have to seriously weigh up whether it is worth sticking it out for the dividend. I am not licensed to give advice – but from a system perspective – applying VectorVest, we meet the 4 steps and we see negative EPS and GRT – we have to take that into account relative to what other opportunities are out there.
Regards,
Russell.