My recent WSA trade was an experiment of sorts to see if the value stock picking approach works. A value stock is one with good fundamentals, but is at least temporarily out of favour. Such a stock is either in a stage 4 downtrend, or stage 1 sideways basing. A breakout can be easily determined using moving average crossovers, or a trend-line breakout.
Statistically, the failure rate is relatively high for downtrend rally trades. WSA has so far failed in this regard, hence I was stopped out at $2.41. Myself trying this alternative approach could be termed style drift. My usual (most successful) approach is to buy new highs. I will now modify my trading plan to exclusively only look for growth stocks trading at new highs over n periods. AAPL is a stock I have never traded or recommended, but is a good example of an archetype growth stock.
From early 2003 to mid 2008, WSA was a strong growth stock frequently trading at new 6 or 12-month highs. When viewed on a monthly chart, the trend is still down for WSA.
WSA Price at posting:
$2.21 Sentiment: None Disclosure: Not Held
