5 Basic Indicators I use to buy stocks

These are the 5 bare minimum basics that I use when trading.   

1) Market cap

• good: 50 Million - 2 Billion

• institutions will tend to buy within this range increasing the share price!

2) P/E ratio = share price/ earning (ratio)

• good: 15-30 P/E!

3)  RSI = relative strength index (in the last 14 days)

• indicates whether shares are undersold or oversold (momentum of stocks)

• under 30: oversold/ undervalued!

• over 70: overbought/ overvalued = indicator that share price will tend to drop = sell when RSI is high!

• good: RSI 12-30!

4) Beta: measurement of investment portfolio risk (measurement of activity)

• good: over 1

5) Average Volume: number of shares that are sold and bought per day (how liquid the

stock is)

• good: over 500,000 (Ideal: Over 2 million)

How did I make a 100% profit on Talisman Energy Inc. (NYSE:TLM)? What do I think is next?

I entered TLM at $3.78 for many reasons. Firstly, I was watching this stock for a while and thought I had bought it at the bottom. Unfortunately, as the day progressed I found out that I was wrong as the price started to drop until $3.49. I thought the stock was undervalued and was being sold based on bad news of oil prices falling. I also found out that billionaire Carl Icahn had positions averaging around $11 per share.

A few days later the stock moves up on news of a possible buyout. The price jumped from $3.70 to around $5 just based on rumors of a buyout. That shows you how much the media has an influence on the stock price of either going up or going down. Furthermore, once the public found out that it was Repsol that approached TLM again, the price started to decrease from around $5 at open to $4.27 by close. This is because Repsol approached TLM earlier during the year but no deal was reached. The next day the price was floating at $5, which was very tempting to sell knowing that the deal might not workout again. I was able to resist my urge to sell because I understood that this time the environment was different with declining oil prices forcing a deal is most likely. The following day I woke up and saw the stock trading at $7.50 on news that Repsol offered $8 US per share.

I think SandRidge Energy Inc (NYSE:SD) and Transocean LTD (NYSE:RIG) are undervalued and will easily move up quickly on positive news similar to TLM.        

Today I decided to invest in The Wet Seal, Inc (NASDAQ:WTSL)

The Wet Seal, Inc. is a retailer selling fashion apparel and accessory items designed for female customers aged 13 to 34 years old through the company stores and e-commerce websites.

The company’s stock has fallen from $4 in October of last year to around 33 cents now. However, they are exploring ways of making a turnaround in the future. Recently, Clinton Group Inc, highlighted the options that are available to the Board of Directors of The Wet Seal, Inc.   

The stock is now trading around 35 cents but has a possibility of trading around $3-5 with a turnaround. This is an ideal trade for a small investor like myself because this stock has a limited downside and huge upside potential. For example, an investment of $350 could possibly turn into $3000 in the event of a turnaround in the future, which is almost a 757% increase on the investment. That is HUGE!

If you are an investor who is willing to take the risk be patient on this trade it might be worth it!

Why should students buy Apple shares (NASDAQ:AAPL)?

Do you own an iphone, MacBook Pro, ipad or any other Apple products? If you answered yes to any of the choices then you should invest in Apple, Inc (NASDAQ:AAPL).

Did you know that every time you pull out your iphone or any other Apple product in public you are personally advertising for Apple, Inc. You may not feel like you are making a difference but subconsciously the people around you notice. Why not get paid for the effortless advertising that you are doing while at school, on the bus, library, etc.

Apple is now worth approximately $670 billion, making it the most valuable company in the world. Google has a market cap of approximately $366 billion, which is $300 billion less than Apple. That is a big difference when you think about it. Microsoft has a market cap of approximately $407 billion that is still less than Apple by $263 billion.

Apple’s current price is around $115, which makes it affordable for small investors compared to its price before the stock split. You can purchase 4 shares of Apple for every share of Google at its current stock price of around $546.

Many analysts have raised their target prices but legendary Investor Carl Icahn thinks Apple could be worth $203 a share.  

Why did I choose to invest in Novavax (NASDAQ:NVAX)?

I choose to invest in Novavax, Inc for a couple of reasons. Novavax, Inc is a biopharmaceutical company that is involved in creating vaccines and vaccine adjuvants to address a broad range of infectious diseases worldwide.

Have you heard of the respiratory syncytial virus (RSV)?

RSV is a disease that affects the respiratory tract of many children and the elderly, leading to pneumonia, bronchitis, and recurrent wheezing. Although, it is usually self-limiting and will go away on its own, there are approximately 3.4 million severe cases of hospital admissions per year globally leading to 160,000 deaths and yet there is currently no approved RSV vaccine.

Novavax, Inc is now in phase 1 clinical trial of RSV vaccine. A vaccine can help decrease the need for frequent medical care, including ER and physician office visits.

Moreover, the market cap is around 1.27 billion, which meets my criteria of smaller market cap stocks, as they are my favourite in creating value quickly. It is traded on Nasdaq with an average volume of 5 million and is not a penny stock that you might get stuck on when trying to exit.

Lastly, the stock price is currently at $5.24 that makes it affordable for small investors like myself.

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