This week, I’m adding a new component to your weekly Automatic Profits Alert subscription.
You already receive instant trade alerts, text-message alerts, 24-7 access to our calendars and the online portfolio, and a weekly portfolio update and webinar … but there was still an important part that I was concerned wasn’t being addressed as effectively as it could be: your questions.
After all, your questions are one of the most vital sources for my weekly updates. I read through them daily, so thanks to you for taking the time to send me your questions, comments and feedback. It is all extremely valuable.
But I realize my weekly updates are sometimes rather in-depth. I write the updates intending to cover many of your questions. Even though my team and I try our hardest to reply to your questions, I know we don’t get back to every single person.
So to better improve our response time and my overall engagement with you, I’m going to write a weekly mailbag, where I’ll answer several of your questions.
This will be an outright Q&A. I’ll answer several questions that you all have sent in, and I’ll send it to you every Friday.
After this week, I’ll get right into the questions, and I’ll keep my answers concise. I’ll save the in-depth answers for your Monday weekly updates and webinars.
My hope here is that I’ll cover many of the main topics you have on your mind in each weekly mailbag issue.
So let’s get into this week’s questions…
George K. writes:
I am looking at the Rolling and Stacking Calendar. What does “Gains” represent in the last column? Today is March 13, so how would you know your year-end gains?
That’s a great question. The Gains column (pictured below) reflects the rolling 10-year average gain for that specific sector. So the health care producers prime season, which runs from March 16 to July 23, has experienced an average return of 31.06% over the last 10 years.
Ken W. writes:
On the calendar, I see the six sectors. I thought I would be able to see the one stock for each sector to invest in. Did I misunderstand this? I’m ready to get started!
I’m glad you’re eager to get started! On the core Rolling and Stacking Calendar, you’ll actually see the main 15 sectors. They are divided into six groups based on which sectors you’ll roll into the next to make the most of your gains. So for instance, the telecommunications and pharmaceutical sectors are grouped together in the calendar, so you know you’re going to roll your gains from the telecom prime season into our pharma trade — and vice versa.
By the way, if you look at the broader Automatic Profits Calendar, you’ll see 26 sectors in which I’ve identified seasonal trends. As for the specific stock to trade for each prime season, well, that’s what you signed up for. I’ll send you every stock my system identifies for each prime season and alert you as soon as the trade is triggered. All you have to do is open your emails and read through them — I’ll do the rest.
If you’re worried about missing out on gains from our previous trades, you can check out the ePortfolio to see if the current prices of those positions are below my buy-up-to price. If they are, and the Action to Take column shows that it’s a buy, feel free to get in.
Stacie B. writes:
I am super excited to start doing this with you! Do the calendars explain when to hold sectors and when to sell them?
Thanks, Stacie! I’m glad to have you as a subscriber! In the calendars, you’ll find the entry and exit dates based on the prime seasons over the last 10 years. By themselves, these are great entry and exit points. But to hunt for even better returns, and to adjust for some possible seasonal changes, I use a timing indicator — the Awesome Oscillator — to identify when it’s ideal to enter and exit our trades. That may shift our entry and exit points slightly. But in general, all my trade alerts and actions to take will revolve around the dates laid out in the online calendars.
Mike B. writes:
When you say “buy to open” as an action to take, do you just mean we should buy it? It sounds like an instruction to buy options.
You’re right, Mike. This is purely a stock trading service. The lingo — buy to open, sell to close, etc. — is related to stock trades as well, although it’s less commonly used.
Michale S. writes:
I am new to the service. I have bought 200 shares of THC and averaged down with an average cost of $19.55. I am willing to buy another 100 shares here at $18. At what point should I hold?
Averaging down into positions — purchasing more units of a stock you already hold after the price drops — is a great way to balance your entry prices with the volatility of a stock. One asterisk to put on this approach is that you may not be able to average down if we see a quick move higher, and a loss may keep going lower. In other words, if you end up buying more shares than you otherwise would’ve because the stock is down, then the stock goes against us, you would lose more when all was said and done.
That’s why I never recommend doubling down on a position — those losses can really hurt a portfolio.
On the other hand, let’s say you were to buy a smaller number of shares initially, then wait for the price to drop to buy more — if the price does nothing but rise, you could miss out on making much bigger gains.
With that said, it’s a great idea not to buy all of your position in one day. For example, if you intend to buy 300 shares of Tenet Healthcare (NYSE: THC), you could buy the first 100 or 150 on the day I recommend it. Then buy 100 or 150 five days later, regardless of where the price is. And if you were doing just 100 each time, you could add your last 100 two weeks later. But as long as you’re watching it closely, there’s nothing wrong with scaling in as prices decline, just as you did.
If this seems complicated, don’t worry: It’s easier — and still ultimately effective — to simply purchase all your position on the first day and ride out our prime seasons.
I’ve also received a great deal of feedback on specific positions, so I’ll use our weekly update and webinar on Monday to spend time looking at some of the positions in our portfolio.
Now, in case you’re thinking, “Oh no, he just added another weekly email that may or may not include a trade” — make sure you’re taking advantage of our text-messaging service so you know instantly whether what I’ve sent is an alert. If it’s a trade alert, you’ll receive a text message telling you to check your email. If it isn’t, you won’t get a text message. If you haven’t signed up, simply click here to sign up now.
And if you’re thinking, “That’s right, I’ve been meaning to send in a question,” now is a great time to do that. You can reach me at firstname.lastname@example.org, and you can send in comments or general feedback about the service — not just questions. I appreciate the time you take to reach out to me, and it goes a long way toward improving this service overall.
Chad Shoop, CMT
Editor, Automatic Profits Alert