A lot of Rule #1 readers are writing in with variations on the same question: if the MOS is good but the tools say Sell, now what?
Here's how Steve worded it:
Hi Phil Town,
RULE #1-Great book. I'm still going thru it and have a question about when two factors collide. For example, I'm running the Big 5 numbers for NBR and they all look really good. Using your calculator, the MOS is really, really high, but I think my last calculation had the MOS around $450+ and the stock is under $40. This seems like a really good buy, but when I look at the chart tools, many of the signals are saying SELL (e.g. MACD just turned negative, RSI is approaching the 50 mark, moving averages are about to cross, STO going below the 80 line).
So my questions:
Is my MOS incorrect?
What to do when two factors collide?
Thanks for any input,
The big guys -- the institutional investors -- control 85% of the money in the stock market, and they don't play the game the way we do. The game they play is "How did I do this quarter compared to my peers?"
For that reason, they may sell a stock that is well under the Sticker simply because others are selling it... and someone started the run just because they wanted to take profits to make the quarter look better.