To hear the mainstream financial press tell it, the markets “have fallen and they can’t get up.”
Not only that, but the media would also have you believe you should gather your capital and dash for the sidelines.
Those folks can’t be talking about the same tech markets I follow.
And they’re clearly clueless about what you should do to make money as an investor.
I say that because, since hitting bottom on Aug. 25, the tech-heavy Nasdaq Composite Index has rallied for gains of roughly 8%. That means, in just six weeks, this tech barometer has turned a year-to-date loss into a 3.4% profit.
I’m here to make you money.
That’s why my first piece of advice is, “Always have some money in the market.”
If you don’t, you’ll miss some off-the-chart bargains. Like the ones that are popping up right now during what I call the “hidden tech rebound.”
So, today I’m going to show you four tools you can use to turn this hidden tech rebound into gold…
Wall Street Is Really This Clueless
Like I said, my job here is to help you make money.
And one of the ways we do that is by taking advantage of Wall Street’s ignorance.
That means making you money in boom times as well as in shaky patches.
Sure, we’re in a volatile market. And rebounds and rallies never follow a straight line to the top. There are always zigs and zags along the way.
But my “Tech Rebound Tools” will give you the skills you need to profit from the market’s new dynamics.
Let’s take a look…
Tech Rebound Tool No. 1: Play “Moneyball”
Volatile markets like the ones we’ve seen this year are a fact of life.
But just because a market is choppy doesn’t mean you can’t profit from it. You can. The secret is to be willing to take smaller gains along the way.
Fortunately, I have a tool that will help us do just that. I call it the “Moneyball” method.
I named this technique after the book and movie Moneyball, which told how Silicon Valley’s hometown baseball team, the Oakland A’s, went on a 20-game win streak during the 2002 season.
Only five teams had ever done that in more than 100 years of professional baseball.
The A’s historic success didn’t come from slamming a ton of homers. Rather, the team focused on getting as many runners on base as possible, which meant they looked for walks, singles, doubles and stolen bases.
For investors in today’s market, a “Moneyball” game plan might entail taking profits off the table when your stock is up, say, 30% or so.
Remember, the faster a stock moves, the more you’ll want to protect some of those “windfall gains” before it has a chance to reverse on profit taking.
And in volatile markets, reversals are a definite possibility.
Tech Rebound Tool No. 2: The Cowboy Split
This is a technique I’ve used over and over to pile up profits for readers of my paid tech investing services, the monthly Nova-X Report and my premium trading opportunity, the weekly Radical Technology Profits.
Simply stated, the Cowboy Split is a staggered-entry system. It involves getting into your intended position “at market” and then putting in a “lowball limit” order to buy more of the position if a discount comes along.
I generally look for a 15% to 20% discount from the original price to use as a second entry point. Here’s how we recently put the Cowboy Split to use in Radical Technology Profits.
We made our first entry in a small cap biotech-related firm at $5.86 a share, and then set our lowball limit order at 20% below that price.
Ten days later the stock corrected and our lowball limit order filled at $4.75, which lowered our average price for the total position to $5.30.
Just days later, the stock of this DNA-related firm went on an amazing tear, producing cumulative gains of 64% in three weeks. Our first leg gave us a 52.4% profit.
But the second half soared 83.5% in just 10 days for annualized returns of 2,922%.
Those returns set the stage for Radical Tech members to deploy this next tool.
Tech Rebound Tool No. 3: The Autopilot System
After a big score, we always want to ensure that no matter what happens going forward, we’ll exit our position with a specific minimum gain.
That’s where what I call the “Autopilot System” comes in handy.
It’s a unique way to protect profits by combing profit-taking with trailing stops.
It works like this.
Recall that, with the DNA stock I mentioned earlier, we used the Cowboy Split exit system to sell one half of our position for 64% profits. With those profits safely off the table, we could afford to let our remaining position run, to see how much more momentum it had.
But this is the key: We didn’t just let the position run unchecked.
We protected our downside in such a way as to ensure combined gains of 32% even if we saw a correction. All it took to pull this off was to enter a stop-loss at our average entry price.
In other words, taking 64% gains on half the position, while at the same time taking steps to make sure we broke even on the other half gave us a 32% return as a “worst-case scenario.”
Best of all, we always had the option of setting our trailing loss above our entry price and locking in even more money. That’s the kind of flexibility I had in mind a moment ago when I said you can make profits in any choppy market if you “remain nimble.”
The beauty of the Autopilot System is that it lets you set up your minimum profit figure in advance. After that, there’s no need to worry about what happens because the Autopilot is “on guard” and protecting your portfolio.
Which brings us to our last tool…
Tech Rebound Tool No. 4: Stop-Losses
You can employ these essential portfolio tools in two ways.
The first method is a classic tool designed to avoid suffering catastrophic losses. You simply set the stop-loss so that it limits any possible losses on a new entry.
I suggest you never use a stop loss greater than 20%.
The second method, the “trailing stop,” is used to protect gains. Here, your stop-loss moves higher as the price of the stock advances. Just like with the first method, you’ll want to set your stop at a maximum of 20%.
So let’s say you bought a stock at $15 that’s gone up to $25 – a 66% gain.
A 20% trailing stop gives you an exit price of $20. With that as your stop, you’re sure to get out with profits of 33% (a $15 entry and a $20 exit) no matter what happens.
By using our Tech Rebound Tools, you can continue to invest in winning tech stocks and know that you’re prepared for anything the market throws at us.
Don’t miss our next conversation. I’ll be talking about several specific stocks I’ve identified that will benefit from the tech rebound that’s already well underway.
P.S. I hope you all are “Liking” and “Following“ me at Facebook and Twitter. We’ve got a great community of friends, colleagues and readers there who are eager to make big money in tech stocks – today.
Strategic Tech Investor: Your Tech Wealth Blueprint.