You Can Identify Hidden Extremes In The Market For Big Gains
Thinking outside the box can make you rich as an investor. Measuring the extremes of the stock market is a great strategy to make huge gains. However your traditional charting won’t show these market extremes or they could be sending you a false signal. For example gold has fallen in terms of dollars but has appreciated in terms of Yen this is due to the dollar appreciating in value vs other currencies.
Since March, gold has dropped 13% against the U.S. dollar… During the same period, the U.S. dollar is up 12% against a basket of foreign currencies. Over the past few years, the Japanese central bank has embarked on a massive campaign to stimulate its economy. This campaign has caused the yen to plummet in value. If you live in Japan, gold just hit a new 52-week high.
You don’t need a Bloomberg terminal to chart these ratios for measuring market extremes. Etrade Pro has some great charts and TradeStation has won awards for it’s charting software. If you have a trading account your broker probably has premium charting software. Identifying these trends is one of the best ways for making big gains. Keep in mind the market can get more extreme sometimes only invest what you can afford to lose.
Read about the three extremes right now in the market.
About Shaun Archer Tatum Shaun works in corporate finance in New York City. He has done financial consulting for several start-ups and has worked at several Fortune 500 companies. He has contributed several finance/investing articles on Seeking Alpha which have been published on Yahoo! Finance.