Succeeding in an Overextended Market

May 6, 2013 by  
Filed under News

 

Over the past few weeks in the Daily Alert we have been discussing how to make money trading in a market that is overextended with some bearish technical signs yet is still trending higher.  And the importance of finding bullish trading setups with low volatility, trading stocks with high dividends or more defensive industries, with a great risk/reward ratio.  

 

Here is a great example so you can spot these in your own trading.  This is a stock featured in the Daily Alert back on March 20th.  And a stock mentioned in one of our recent free webinars.  The stock was APO. 

 

This stock has beaten their earnings expectations by 22 to 64 cents per share over the past four quarters.  With rising future estimates.  And the company was paying a 17.9% dividend yield.  The stock was in a strong uptrend and was pulling back to its uptrend support.

 

The high dividend helps to support the price of the stock during a market correction.  And the financial XLF index was still trending higher at the time with no bearish patterns.  Despite the overbought nature of the overall market.

 

Here is the chart as it appeared in the Daily Alert on March 20th: 

 

 

We liked the ever-increasing volume pushing the stock higher in a low-volatility uptrend from a nice basing area between $13 and $14.  The stock was pulling back on low volatility in a uniform downtrend back to its uptrend support when we featured it to subscribers. 

 

Shortly after being featured the stock reached our target entry point by closing above the short-term downtrend shown above.  And then raced about 25% higher in just over a week. 

 

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