The title may have caught your eye; if you have never considered owning foreign stocks, now might be a good to start thinking about it. While some investors may consider owning foreign stocks a little too exotic for their blood, successful traders should view this as a speculative opportunity to reap some handsome profits. Many investors are attracted to foreign stocks by the chance to participate in growing economies outside of the United States. In addition, when the US economy is less than attractive or other economies, especially some of the emerging economies, show investment potential, an investor can find good opportunities.

Do you have room for foreign stocks?
Before you consider purchasing any foreign stock, you need to take inventory of your stock portfolio. This is a good practice to perform periodically, reviewing your portfolio and looking for holes; areas where your portfolio doesn’t align with you stock trading plan. If you have a conservative plan you will need to make sure you don’t already have too many growth stocks. If your plan is more aggressive, look to see if you are ready to add more speculative holdings. Even if you are ready, most investment professionals recommend holding 10% or less of your portfolio in foreign stock; if your trading plan is conservative, you should have even less than 10%. This is consistent with holding of speculative stocks in the US as well.

Problems with Foreign Stocks
The biggest problems with foreign stocks are the difficulties in finding, evaluating and buying them confidently. There are a growing number of stocks that trade on the US stock exchanges. In addition, the stock market community formed the American Depository Receipts, or ADR, more than 75 years ago to help in the trading of foreign stock. The ADR works like this; a US bank will buy a large block of stock in a foreign company and package them for reissue in the US stock market. You will be able to identify them as foreign stock, because they always have “ADR” after the name.

Foreign Stocks in the US Markets
One piece of good news for you; foreign stocks in the US markets trade in American dollars so there is no need for doing currency conversions when you buy or sell as these conversions happen behind the scenes. The price of the stock usually follows the price in its original country. Because of this, there are times when the US stock prices and the originating prices don’t match up well. When this happens, the US bank holding the shares may actually bundle shares together and one ADR share might equal two or more of the original shares. Learning how to invest in foreign stocks is actually quite easy.

Benefits of Owning Foreign Stocks
Owning foreign stocks has several attractive benefits. These benefits include:

• Global Economy – Investing in companies occurs all over the world and opportunities have followed. There are many emerging markets such as Eastern Europe, the Pacific Rim, and Latin America.
  
  
• Portfolio Diversification – In times when the US markets and economy don’t offer the best investment alternatives, looking to other countries can give you more opportunities.
  
  
• Uncommon Returns – While there can be significant risk involved, foreign stocks offer risk reward ratios that are very attractive because of the potential for incredible returns.

Risks of Owning Foreign Stocks
In spite of the efforts to include foreign stocks in the US stock market, there are still some very significant risks. The currency exchange is a tricky problem because currencies in other countries change much faster than in the US; this can create wrinkles in buying and selling foreign stocks that may work against you. Economic turmoil is another concerning factor since few countries have the structure to protect investments from inflation; inflation can have a devastating effect on your return on investment, even when the profits are high.

Conclusion
Owning foreign stocks can be very attractive to most investors and they should consider it an option at some point, in spite of the risks. Taking a conservative approach and using your portfolio as a shield can potentially make foreign stocks a very good investment.

Dow

At the same time, the NASDAQ came up and tested the recent high. Combining the chart analysis of the NASDAQ and the Dow reveals that there is not any selling pressure occurring at these high levels. Witnessing the NASDAQ breaking up through the recent high would confirm the buying strength that was seen in the Dow on Friday. Currently both the Dow and the NASDAQ weekly charts are illustrating a Jay-hook pattern. This should be additional evidence that the uptrend in the market could continue from here.

Nas

Keep in mind, markets/prices move based upon investor-sentiment. Seven weeks ago the market sold off hard because investor sentiment was worried about a slowdown in the Chinese economy. As you may have noticed, that rhetoric has not been publicized over the past five weeks. Earnings are now affecting the market. Let the market tell you what the market is going to do.

Understanding the investor sentiment that produces the candlestick signals dramatically improves an investor's ability to find high profit trades. Once the analysis of the direction of the market in general is accomplished, performing the scans for the biggest potential price moves becomes much easier. What is the most powerful candlestick signal? The Kicker signal! A Kicker signal is created by some outside factor that has dramatically changed investor sentiment. That factor usually will continue its influence for a good while after the new price trend starts. Our recommendation for GCO last week was based upon the appearance of the Kicker signal.

GCO

GCO is an example of a definite change of investor sentiment. When a Kicker signal occurs often a major moving average, it provides that further confidence to investors that the news and the support level make it a prime time to buy. Do all prices move aggressively after a Kicker signal? Not necessarily, however as with all the candlestick signals, it puts you in positions that have a high probability of moving in the direction you want.

Chat session - Chat session tonight for members at 8 p.m. ET. There will be a Thursday night chat session open to everybody at 8 p.m. ET. Mr. Bigalow was a guest speaker this past weekend in the North Georgia Mountains. He was speaking along with well known names in the investment arena. He will be telling the story in the chat sessions of how he was concerned of whether he would make an impression on the audience. His speaking spot was right after the nationally renowned market technician, Ralph Acampora and just before the Elliott wave advocate, Robert Spector. Join him in the chat room as he describes his unique and unplanned approach for making a lasting impression on the few hundred investors that were not familiar with candlestick investing. It was not elegant, but it was memorable.

Setting Entry & Exit Points

The Secret to Trading....Timing is Everything. Missing your best entry and exit points? You are not alone, this continues to be among the Top Ten questions we receive from other traders. Help is just a click away and for the next 3 Days Only - receive a 35% off our most popular video. Click here for Setting Entry & Exit Points video.