This column was originally published on RealMoney on Jan. 25 at 9:00 a.m. EST. It's being republished as a bonus for TheStreet.com readers.
One of the more challenging aspects of writing for such a diverse group of subscribers is, well, the diversity of interests.
As I sift through my emails each night, I am continually reminded of the great number of ways to skin a cat. Some of you have quite long-term holding periods. You are the tried-and-true investors who find a good company when it's still a good small company, take a bit of the stock and then let the company do the work for you. The improving fundamentals are eventually noticed by others, who then drive the price of the stock higher.
Others have shorter timeframes, which means you have different questions. Rarely are fundamentals discussed; it's only price action over the past few weeks or months. Still others choose to focus on multiday action, focusing on volatility squeeze breakouts as seen on daily charts, violations of support or resistance and notable price changes from one day to the next.
But irrespective of timeframe, the ultimate question is always the same: Where can I make the most money? Timeframe is really a secondary issue. Folks rarely choose their trading timeframe; rather, it chooses them. Personality and various other individual factors are a big influence on timeframe. Think about it, and you'll probably find that your timeframe is a direct reflection of your personality. An active, restless person will often gravitate towards shorter timeframes. If you tend towards patience and delayed gratification, you'll be able to hold positions longer and let them work for you.
The most important thing is to avoid fighting yourself. Understand the innate traits that drive your trading behavior. With a bit of self-awareness, your trading behavior will be in sync with your personality. It's possible to succeed in any timeframe -- but it's easier when the timeframe matches your personality.
Today, let's take a trip around the world and check out some ETFs that were passed on to me by a long-time reader. These five,
FTSE Xinhua China 25
, would indicate there is indeed a bull market somewhere.
There are about 1.3 billion reasons China's economy is growing. The FXI iShares is reflecting that growth, and I don't think it's too late to hop on board. RSI is showing a strong uptrend, and prior resistance lies just a couple of points below. I'd stay long here, with a stop at around $65. I'd also use any pullback to take in some stock.
The Swedish ETF had been trading sideways for most of 2005. But over the past few months, the market has become bullish on Sweden, taking the stock out of the tight trading range and in search of higher levels. The mild pullback over the past couple of weeks may be driven by profit-taking, although the heavy volume is a bit troubling. Profit-taking typically occurs on light volume. However, a resumption of the uptrend reveals selling pressure to be minimal, and a long position as less risky.
The Malaysian ETF is essentially flatlined. (Paddles!) But this tight volatility will come to an end at some point. The question is when that magical moment in time will arrive. I'd let the price action be your guide and wait for a breakout above $7.50.
This ETF is in a steady uptrend, continually cycling between the middle and upper Bollinger Bands. That's bullish because it is indicative of aggressive buying on any type of profit-taking. I think EWZ will move higher from here, but the current price level begs for a pullback. I'd exercise some patience and wait for one.
Oh Canada! This stock is stair-stepping its way to higher levels. I've highlighted an area of relatively low volatility. The stock remained within a narrow enough range to bring the Bollinger Bands together -- an indication of a pending volatility squeeze. When volatility squeezes tightly, only a little nudge is required for the stock to break out. That's what EWC is doing now. The trend is higher, and I'd be a buyer on any tag of the middle Bollinger Band.
Be careful out there.
Dan Fitzpatrick is a freelance writer and trading consultant who trades for his own account. His columns focus on quantitative strategies for trading and investing. Fitzpatrick has lectured throughout the U.S. on the proper use of technical analysis and options trading. At time of publication, Fitzpatrick held no position in any stocks mentioned, though positions may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. While Fitzpatrick cannot provide investment advice or recommendations, he appreciates your feedback;
to send him an email.