Follow Investment CapitalA useful means of picking stocks for either long term investing or for day trading is to follow investment capital. This is a little like the old adage which says that if you want to understand a problem, follow the money. Two current news items bring this to mind. GM has come back from bankruptcy and is pouring investment capital into plant improvements across the USA. Capital investment in China is said to be moving inland. Once an investor has picked stocks for his stock portfolio or the trader has picked volatile stocks to trade the next important step is to use technical analysis tools such as Candlestick stock charts to gauge market sentiment and buy stock or sell stock at the optimum stock prices .
Investors commonly use statistics such as employment figures or the US balance of payments as well as specific company financial reports for fundamental analysis of stocks . They also watch insider trading information as reported to the SEC. Another useful stock trading and stock investing strategy is to follow investment capital. China continues to grow their economy at near double digit rates and now, just months after its return-from-the-dead IPO, GM is budgeting $2 Billion in plant upgrades across the nation. The point is that investment capital follows opportunity and can light the path for other stock investors and traders .
According to press releases General Motors is putting $130 Million into plants in Toledo, Ohio, Bedford, Indiana and Wyoming, Michigan. Over the next year and a half the company plans to upgrade a total of eighteen plants for a total of $2 Billion. If the investor decides to follow investment capital and let GM investments guide his stock investment , where does he invest? The first thought that comes to mind is that GM is back and presents an investment opportunity all by itself. Then there are GM suppliers who will profit from a GM recovery. This sort of investment preserves jobs and local buying power which will recirculate through the communities where GM is investing capital. The Chevy Cruze was the bestselling car in the USA last month. Japanese auto production is hampered by the fact that the Tokyo Electric Company power grid that supplies the bulk of electric power to Japanese industry is damaged due to the recent earthquake and tsunami. GM has had its most profitable quarter since 2000 and seems to be on the rise. However, stock traders are always aware that what goes up can also come down. With the skillful use of Candlestick analysis traders and long term investors can profitably anticipate market trends and market reversal as relate to GM or other stocks.
If the investor is going to follow investment capital as a guide to his own investment the situation in China could lead to profits. The country is looking inward to balance the effects of the weakening economy in Europe a possible reduction in global monetary supply. China is plowing money into housing and other infrastructure and continues to see near double digit growth. This situation can translate into profits in banking and construction, as well as consumer goods, manufacturing, and consumer goods. By picking Chinese stocks traded via American Depository Receipts US investors and traders could follow investment capital in China and find profits. As with all investing and trading, fundamental and technical analysis are important to gain profits and reduce investment risk . As always Candlestick charts are a reliable guide to market sentiment, potential profits, and potential risk.
Market Direction: Having knowledge of what is expected from signals and patterns allows an investor to be putting on positions aggressively at the appropriate time. The Dow produced an excellent example. A strong bullish day occurring on Tuesday was followed by a Doji on Wednesday. There is a very simple rule to apply to this set up to get into positions at the exact appropriate time. The US dollar also had a very profitable and easy to identify trade based upon the simple Doji rule.
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