BECOME A MORE PROFITABLE TRADER WITH THE RIGHT EDUCATION

Get on our mailing list so you know when we release free training, live classes, new courses, and even discounts and promotions.

Stocks with Great Fundamentals but BAD Technicals – Possible? #HungryForReturns 36

In this post, we’re going to mention one of the older episodes.

Here’s the question from Patricio: What can cause a company to have great fundamentals, but bad technicals? What are some characteristics of a discrepancy between the two?

In episode #14, we talked about technical analysis versus fundamental analysis. And what I always say, if you have a stock with great technicals will probably have great fundamentals in that company.

Or if you have great fundamentals in the company, you’ll probably have great technicals. They usually go hand-in-hand. But my rule of thumb is that typically technicals will be a little ahead or dominate the fundamentals. That’s because when panic and fear sets, people will dump the stock without really looking at the fundamental data.

That’s because fundamentals are for the long term. But when you have emotional dumps happening to sell off the stock: people are just selling and getting rid of it.

The same thing on the buying side. They’re just buying it without overthinking. They assume something great is going to happen. And then things catch up. 

When it comes to the discrepancy between the two, they usually go hand-in-hand. But sometimes they don’t align and it often eventually catch up. 

But when does that happen?

Facebook example

Well, you need to think about it from a company perspective. Mark Zuckerberg here was dumping Facebook in this timeframe, and that can be a red flag. 

Maybe he wanted to do something else with the money, to invest in hospitals, some cure disease, and that’s fine. 

But if you have multiple a big picture investors dumping early on, they probably know something. You may think no, they don’t. But yeah, they do. They usually know ahead of time.

That’s because they get inside those books. They look at those books, valued the company, and they talk to people. They know people, and that’s what happens. 

You might have these companies start selling off, and then the real public later realizes that.

At this moment, those other employees are now starting to leave. But that’s already 40-50 points or maybe like 15% lower in the stock price. The thing to watch is that insider selling in the company. 

General Electric example

You could say the same for GE. Not that I know too much about GE insider buying or selling, but I would imagine that some of those people in GE knew these things before these dumps.

They’re trying to get rid of some shares and granted a lot of the CEOs are compensated based on the stock price and performance for that exact reason.

That means that they can keep pushing the stock price higher for their investors. That’s why a lot of their salaries done that way. Also, it because it’s based on, for tax benefits, helps the company that way.

They can pay them out of the dividends and stuff, but the reality is that these big dogs know what is happening.

Harley Davidson example

Harley-Davidson continues to go up and then get this big selling thing that happened here. That beginning, selloff, when insider people are starting to dump things that could be a huge red flag.

That’s usually when things don’t align. Technicals look pretty good, and the fundamentals they look pretty good as well. But then the technical start to roll over. And as they start to roll over, it’s because of the insiders.

Wells Fargo & Company example

This company has crookedness all over it day in and day out from the previous few years to now. I mean, they keep discovering new problems all the time.

And for big companies like this, it is like take a few billion dollars and take care of the problem. But all they do is they rotate people. They are blaming different people and problem solved. At least that what they think.

But the problem doesn’t get solved.

And they never catch up. 

That’s the thing with big companies. They try to figure it all out, and this is what happens. There is nobody to blame.

They can’t find anyone because there are too many fingers all over the place. There’s no big enough consequence for these companies. This is going on for five years. Five years later, they realize they’ve been cooking these books, and all these frauds been happening to push and pressuring people creating fake accounts.

This is a perfect example. Fundamentals are great, technicals look great, and then later bad news — this another thing to watch out for.

These things create issues and problems and the alignment between the technicals and the fundamentals. Look at Wells Fargo look at all of the issues regarding the fundamental data. As a regular person, would you trust them to hold your money? Think about that. 

Being Cautious is Crucial

I hope it gives you more insight on when things are not in alignment. You can see, sometimes things are not in alignment, even when they appear to be with fundamentals and technicals. 

But the reality most of the time they will be because those insiders will be dumping the stock. You’ll see some of those signs and eventually will catch up.

This is one of the reasons why you should be diversified. Who knows, maybe get one of these Wells Fargo things happening or some other things where people are dumping accounting fraud.

Some companies have problems, and their problems are at the top. Always diversify because you never really know where you might lose your investment capital.

Final Word

Play it safe, diversify, spread your money around, whatever makes you feel better. And then continue to live your life and enjoy it.

If you have a specific question you want me to answer about trading and investing, submit one by voice here!

Join other stock who get a trading edge each week with our newsletter

Get our free stock market tip, video reviews, and exclusive announcements.

No spam, no gimmicks, no junk - Unsubscribe anytime

I'M SASHA.

Thanks for joining me on my trading website where I share with you about trading stocks and options.

DOWNLOAD 100 Stock trading tips Book

Ready to check out some of our best-selling books that can help you become a better and more profitable trader? Check them out by clicking the link below… 

Video recaps on the recent market trends

Summary of recent market activity looking at swing chart opportunities, potential setups, and technicals.

Stock market picture charts annotated

Quickly review screen captured stock charts with annotations. Includes support, resistance, ABCD patterns, and possible breakouts.

want some helpful advice?

Pay-Per-Minute Coaching

I am scheduling helpful coaching sessions for people who are interested in real-world advice & guidance where you only pay per session. No long term commitment required.

This website and content is for information purposes only as Rise2Learn, TradersFly, and Sasha Evdakov are NOT registered as a securities broker-dealer nor an investment adviser. No information herein is intended as securities brokerage, investment, tax, accounting or legal advice, as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security or fund. Rise2Learn, TradersFly, and Sasha Evdakov cannot and does not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. The reader bears responsibility for his/her own investment research and decisions, should seek the advice of a qualified securities professional before making any investment, and investigate and fully understand any and all risks before investing. Rise2Learn, TradersFly, and Sasha Evdakov in no way warrants the solvency, financial condition, or investment advisability of any of the securities mentioned in communications or websites. In addition, Rise2Learn, TradersFly, and Sasha Evdakov accepts no liability whatsoever for any direct or consequential loss arising from any use of this information. This information is not intended to be used as the sole basis of any investment decision, nor should it be construed as advice designed to meet the investment needs of any particular investor. Past performance is not necessarily indicative of future returns.

THINKORSWIM

OPTIONS PLATFORM

Learn to see how I personally use the ThinkorSwim platform to trading options and what are some of the tips and tricks to using this platform efficiently!

VIDEO TRAINING

OPTIONABLE STOCKS

Enter your email address below and get access to our downloadable report on the 50+ great stocks for Options Traders!

50+

DIVIDEND PAYING ETF's

Want to know the top 7 ETFs that pays the biggest dividends in 2020? Download this list now and start earning your dollars!

7

15 HOT STOCKS

WARREN BUFFETT LOVES

Trade and earn like Warren Buffet! Here are the stocks he invests in!

Ready to Get Our Educational Videos Each Week?

If you are serious to learn how to trade stocks more profitably, make more money, and trade with confidence...

 

Then sign up to get our free educational videos!

AWESOME!

Just one more thing... 

Ready to Learn Profitable Strategies to Trading Stocks?

If you are serious to learn how to trade stocks more profitably, make more money, and trade with confidence...

 

Then sign up to get our free educational videos!

AWESOME!

In order for you to get your goodies and freebies you have to confirm your email address.

 

To confirm your email address, just go to your email inbox (or check your spam) and click the link that's inside the email that states you want to receive messages from us.

 

That's its!

Just one more thing... 

Portfolio Allocation - Percentage of Each Stock

If you are serious to learn how to trade stocks more profitably, make more money, and trade with confidence...

 

Then sign up to get our free educational videos!

Quickly Calculate Mid-Day Volume

This Excel sheet will allow you to quickly find out if your stock's volume is trading above or below the daily average during the middle of the day.

Top 15 Dividend Stocks for Retirement in 2020

Download our list of the best stocks for retirement. Simply enter your email address below to get the PDF!

Buying or Building a Trading Computer for 2020

Learn how to buy the right computer for your trading needs or choose the perfect parts if you are custom building a trading computer!

 

 

VIDEO COURSE

Top 25 Tech Gear for Traders

If you are serious to learn how to trade stocks more profitably, make more money, and trade with confidence...

 

Then sign up to get our free educational videos!

Awesome Phone Apps for Traders

Discover these awesome phone apps most traders use on trading! Earn money anytime, anywhere with these apps!

Do you want to download a list of over 125+ popular stocks that you should keep your eye on?

 

Enter your email below and we will email you the list of 125+ hot stocks!

OPTION TRADING GEEKS

Download my easy worksheet so that you can quickly see and know what the greeks will do to your position! 

 

Enter your email address below to download it!

OPTION STRATEGIES

Enter your email address below and get access to our video strategy session on 25+ option strategies and how to set them up!

25

How Long Will it Take to Reach $1,000,000 in The Stock Market?

Want to see for yourself how long it will take you to reach $1,000,000 based on your personal return?

 

Then download my Excel cheatsheet for FREE to see and play with the numbers!

OPTIONS GREEKS

Ready to get a deep understanding of the option Greeks?

 

Get access to my video training by entering your email address below!

VIDEO TRAINING SESSION

Ready to Get Our Educational Videos Each Week?

If you are serious to learn how to trade stocks more profitably, make more money, and trade with confidence...

 

Then sign up to get our free educational videos!

AWESOME!

In order for you to get your goodies and freebies you have to confirm your email address.

 

To confirm your email address, just go to your email inbox (or check your spam) and click the link that's inside the email that states you want to receive messages from us.

 

That's its!

Just one more thing...