Heyer Capital, LLC

investment management and timely advice from a local CPA (Fox Valley, Wisc.)

Bank of Nova Scotia – BNS

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Here’s a recent thought process on screening for ideas and a trade. Jim Cramer – who is right up there along with the Investor’s Business Daily in providing quality ideas and commentary on the market – recently suggested we look at money center (mega) banks instead of regional banks due to more favorable valuations as a group.

I entered Citigroup – “C” – at http://www.investors.com to get a Stock Checkup. In addition to the usual useful data, it shows the leaders in the industry group. That is usually a good place to start sniffing around and checking charts and earnings growth.

Bank of Nova Scotia - BNS

Here’s Bank of Nova Scotia, a Canadian mega-bank.

The blue line in the chart is the 200-day moving average of the stock price. Note how often the stock moves close to the 200 average and finds support. “Finds support” is the highly technical term that means someone did some big buying–big enough to move the stock price.

The big-picture lesson here is that investors should watch for large cap stocks approaching the 200 day average. (The usual earnings quality screening and sell-protection rules apply in this method too.) I think that adding shares along the 200 day average adds a decent margin of safety.

If the stock has a history of bouncing along the 200 day average, I infer that means large instititutions are using the 200 average as buy-points. When you can, invest alongside with the big boys.

No position in BNS; just commentary.


Written by heyercapital

April 12, 2007 at 2:49 pm

Posted in charting, stock ideas

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