These days of market uncertainty may be a good time for traders to scout for bargain stocks. Euro Zone leaders met in another attempt to come to agreement on the EU debt dilemma. A figured bandied about is €2 Trillion (about $2.6 Trillion in USD) needed to stabilize banks and shore up the national treasuries of countries like Greece, Italy, Spain, Portugal, and Ireland, the so called PIIGS group.
When the news carries a story about a possible solution to this problem stocks surge and when a contradicting story follows, stock prices fall. As the world seeks, with varying degrees of success, to extricate itself from the worst recession in three quarters of a century both those interested in long term investing and in day trading are keeping an eye out for bargain stocks. Both fundamental and stock technical analysis are necessary in finding bargains in the stock market. Buy and hold investing works when an investor finds a stock with a strong intrinsic stock value and a good margin of safety. The investor uses technical analysis with Candlestick charts in order to keep in touch with market sentiment and buy stock at the lowest reasonable stock price.
Stock traders have a wider range of options that investors do when trading bargain stocks. When a low priced stock comes in with strong profits and gains the attention of the market its price often jumps accordingly. If stock market news comes out after trading hours the stock will often open substantially higher the next morning. Traders using Candlestick stock analysis who know how to anticipate, or trade after, a breakout gap can often obtain the majority of profits available from such a stock. Sometimes a popular stock disappoints the market despite strong earnings.
For example, Apple failed to meet analyst earnings estimates for the first time in years despite a more than fifty percent increase in profits. Thus the market punished Apple with a fall in its stock price. Maybe the fact that the company co-founder has passed away has made investors question the ability of the company to come up with new and exciting gadgets. If Apple falls a bit more based on negative investor sentiment, instead of rising based on its strong fundamentals, it could also enter the world of bargain stocks.
In the stock market of today with so much attention on large US banks being sued for allegedly selling bad mortgages to Fanny Mae and Freddie Mac, bank stocks might fall in the category of bargain stocks. We are not suggesting that anyone engage in bank stock investing or avoid bank stocks but offer the situation as an example of how to find bargain stocks to trade or invest in.
Traders following such stocks can use Candlestick patterns to assess market sentiment. Candlestick signals can help traders in commodities, futures, options trading, Forex, and stocks, trade equities that are mispriced due to market inefficiency. By learning the fundamentals of the stock in question and then reading easy and clear Candlestick signals traders can profit in up and down markets, especially in trading bargain stocks.
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