Strategic trading to grab ‘the outliers’

Tuesday, 14 November 2017
Melbourne, Australia
By Bernd Struben

  • ‘We are getting really, really, really close…’
  • Oil approaches two-year highs

‘The outliers’, according to Quant Trader’s Jason McIntosh, are stocks that rise more than 100%.

In other words, the kinds of stocks we all want to line our portfolios with. If only it were that easy!

Jason McIntosh, as you may know, kicked off what was to become a highly successful trading career in 1991, at Bankers Trust — a Wall Street investment bank based in Sydney.

By the time he was 37, he’d made enough money to retire from corporate life. But he never lost his interest in — or innate skills for — trading stocks. And three years ago, he agreed to share his stock recommendations and trading secrets with the launch of Quant Trader.

You might think that strategic trading requires years of study to do successfully. But, as Jason explains, that’s far from true:

There’s a trading style I believe just about anyone can use. I call this strategic trading.

Now, strategic trading is a medium-term approach. It helps keep portfolio management relatively low. The style also combines a trend-following strategy with risk management…

What I’ve done is take my trading experience and convert it into algorithms. When you follow a Quant Trader signal, you’re using the same trading style as me.

‘Quant Trader’s core strategy is to maximise profits. The system does this by letting winning trades run. That’s how you get the ‘outliers’…stocks that rise more than 100%.

The other side of this is managing risk. Every good trading style has a strategy for this.

Profits could make you wealthy. But too many big losses will ruin you.’

If you’ve ever invested in a stock that doubled in value, you’ll be familiar with that nagging temptation to take some profits off the table. Maybe you decided to sell half your shares. That would see you recoup your original investment. Meaning you can let the rest ride ‘risk free’.

But according to Jason that’s, generally, a big mistake. One that can see you taking money out of a winning trade well before it runs out of steam. He advises a different method for managing your risk. One that lets your winners run…and run. And one that cuts your losers early.

You can discover the ins and outs of Jason McIntosh’s strategic trading system here. And then you can decide if it’s something for you.

Fair warning though. It could change the way you trade forever. Details here.

Speaking of stocks, let’s have a look at markets.

Markets

Overnight, the Dow Jones Industrial Average closed up 17.49 points, or 0.07%.

The S&P 500 gained 2.54 points, or 0.10%.

In Europe, the Euro Stoxx 50 index finished down 19.24 points, or 0.54%. Meanwhile, the FTSE 100 fell 0.24%, and Germany’s DAX lost 53.06 points, or 0.40%.

In Asian markets, Japan’s Nikkei 225 index is up 98.63 points, or 0.44%. And China’s CSI 300 is down 0.66%.

In Australia, the S&P/ASX 200 is down 55.57 points, or 0.92%.

On the commodities markets, West Texas Intermediate crude oil is US$56.73 per barrel. Brent crude is US$63.16 per barrel.

Gold is trading for US$1,277.85 (AU$1,677.85) per troy ounce. Silver is US$17.03 (AU$22.36) per troy ounce.

One bitcoin is worth US$6,569.88.

The Aussie dollar is worth 76.16 US cents.

‘We are getting really, really, really close…’

Are you tired of hearing about Amazon.com, Inc [NASDAQ:AMZN] yet?

Well take a deep breath. The story isn’t going away.

Although, the US$544 billion (AU$714 billion) online retailer won’t spell the end of bricks and mortar retail in Australia, it’s sure to be a game changer. And the countdown to launch is likely down to a matter of days.

Country manager, Rocco Braeuniger addressed potential suppliers at a conference in Sydney yesterday. Speaking of the company’s Aussie launch, he said, ‘Let me tell you we are getting really, really, really close.’

Not terribly specific. Though three ‘reallys’ is revealing.

I don’t have any inside scoop here. But the rumour mill still has it that the launch will come within the next nine days. That would see Amazon enter the market just in time for the consumer shopping sprees, on Black Friday and Cyber Monday — 24 and 27 November.

And Amazon aims to come in swinging.

From the Australian Financial Review (AFR):

Amazon has confirmed the fears of Australian retailers by claiming it is willing to sacrifice short-term returns to ensure long-term success as it prepares to invest $700 million in Australia over the next five years…

We want to do the very same here (as we did in Spain),” [country manager Rocco] Braeuniger said.

“We’ll bring thousands of jobs to Australia, we’ll invest millions of dollars and help sellers grow their businesses and be successful.”

Products will be delivered from Amazon’s fulfilment centre in Dandenong South in Melbourne, which was acquired in July and is already operational. The fulfilment centre has similar layouts and systems to other sites overseas to enable fast handling, picking and packing and has the capacity to distribute hundreds of thousands of products.

It is understood Amazon is initially aiming for two-day deliveries until it can open fulfilment centres in other states and a series of small despatch centres to facilitate the launch of Prime.’

Amazon has long been about sacrificing short term returns for long term success. It’s why the company’s profit margins remain razor thin, despite massive annual turnover. And why the stock trades on a price to earnings (PE) ratio, of 285 times.

Nosebleed PE ratio aside, two things are worth taking away from the article.

First, Amazon plans to spend US$700 million setting up shop here.

Second, they’re still fine tuning their delivery process. And if you know anything about Amazon, you’ll know it’s all about cheap, fast, and reliable delivery.

According to small-cap investing expert, Sam Volkering, that crucial missing part of Amazon’s service could see it flounder here in Australia. Our market and geography are like none other, in the world.

That’s why Sam’s convinced Amazon will need the services of one particular Aussie listed company. A company that can help Amazon get its packages delivered on time…and to the right address.

If he’s right, this small-cap stock could be among the first to benefit from Amazon’s $700 million cash splash Down Under.

Which is why this stock could soar by 750%…or more. You can find out exactly why here.

Oil approaches two-year highs

In early September, Greg Canavan published a special report titled, ‘The Aramco Fix Part 1: The Kingdom’s Secret Plan to Reverse the Oil Price Revealed’.

In that report, he detailed why he believes oil prices are only heading higher into 2018. The report is well worth your time to read in its entirety. But in a nutshell, it all has to do with Saudi Arabia’s plan to sell part of its state-owned oil company, Saudi Aramco.

Sometime in 2018 — the date’s still not set in stone — the Saudis are planning to sell 5% of the company in an initial public offering (IPO). And they’re hoping to get at least US$100 million for that slice, making it the largest IPO in history.

But as Greg explains, to get that much, oil prices need to run higher. And the Saudis need to demonstrate that they still have control of the market.

Which is precisely what the Kingdom and OPEC have been doing for the past few months. And they’re keeping their foot solidly on the…erm…gas.

From today’s AFR:

OPEC raised its forecast for demand for its oil in 2018 and said its deal with other producers to cut output was reducing excess oil in storage, potentially pushing the global market into a larger deficit next year.

The Organisation of the Petroleum Exporting Countries also said in a monthly report it had cut its estimate of 2018 supply from non-OPEC producers and said oil use would grow faster than previously thought due to a stronger-than-expected world economy…

OPEC and its allies are discussing extending their supply pact for as long as nine months, officials have said ahead of the November 30 meeting in Vienna.

Doing so could lead to a sizeable supply shortfall next year. Should OPEC keep pumping at October’s level and other things remain equal, the market could move into a deficit of about 830,000 bpd next year, the report indicates.’

A ‘sizeable supply shortfall next year’. Nine more months of extended supply cuts. And all this with the global economy picking up steam, meaning an increasing demand for oil.

Sounds like Greg nailed ‘the Aramco fix’ right on the head.

But Greg went a step further than predicting the Saudi’s tactics. He also recommended three Aussie energy stocks that he believes will benefit the most from the spike in oil prices.

If you’d invested in all three of those stocks when Greg first recommended them, you’d be sitting on an average gain of 57.2%. But that’s still just a fraction of the gains Greg expects from these companies over the coming months.

You can get all the details here.

Cheers,
Bernd