8 Stock Trading Factors to Watch

0

Diversification

Perhaps one of the most important things stock traders can do now is to use diversification. If you’re still clinging to the overperforming tech sector — which boomed during the pandemic — you might want to add other sectors and industries.

In the medium term, adding stocks that provide some inflation shelter, such as commodity stocks or real estate, can add additional security to your portfolio. Otherwise, short-term traders may want to keep an eye on commodities as markets continue to fluctuate amid market uncertainty.

Inflation hedge

Due to strong inflationary pressures, many stock traders opt for sectors that offer some protection against declining portfolio value. As noted above, businesses that deal in commodities and real estate can be a good way to counter some of the impact of inflation on wealth.

Earnings

Although most of the earnings season is behind us, short-term traders can still keep an eye out for many companies that have yet to release their earnings reports. Whether shorting a poorly performing company or buying a strong one, short-term traders can find opportunities among companies that will report their results in the coming weeks.

Cryptocurrency

Buy the dip or cut your losses? Short-term and medium-term traders may have opposing views on the future of the crypto industry, but one thing is certain: crypto industry volatility can come with strong profit opportunities. For people who prefer to limit their exposure, crypto stocks can offer enough volatility while being more stable than buying actual digital currencies.

Foreign stocks

Another trending theme is the focus on the global stage and away from the US economy. The S&P 500 is expected to end this year on a lower note, underperforming international equities. Some of the pressures on the US economy and the reason for the underperformance include supply issues, tax changes and political uncertainty. For more details on the trading factors this year, you can also check out this article from ThinkMarkets on this topic.

The EV on the rise

The EV (electric vehicle) industry is in a bullish phase. Giants like Albemarle (a lithium company) are showing strong buy signals, while oh-so-popular Tesla stock is in the spotlight as Twitter forces Musk to complete the acquisition deal at $54.20 per month. action, but the agreement still remains uncertain to this day. .

Foreign electric vehicle stocks like BYD are also worth watching. The Chinese company manufactures electric vehicles and batteries and is to supply batteries to Tesla’s factory in Berlin.

Bear market fears at the end of 2022

Rising inflation, the Russian-Ukrainian conflict and falling consumer and business confidence are raising fears in markets in the second half of 2022. Real estate and food stocks remain in focus, along with other inflation-resistant sectors like utilities and consumer staples.

Growth slowdown

Another salient trend in the second quarter of 2022 was the slowdown in global earnings growth. Yet, although earnings growth forecasts for foreign equities are muted, they remain positive for all types of equities, including developed and emerging markets.

For short to medium term traders, this can be good news – whether you want to buy the dip or follow the trend and short these stocks.

Summary

Uncertainty and fears of recession increase stock market volatility. More so, some stocks perform better than others when inflation is high. For the remainder of the year, commodities and other inflation-resistant stocks are expected to remain at their peak. It is important to monitor market developments both domestically and internationally, as major political unrest in the Middle East and Eastern Europe can lead to increased volatility in global markets.

While this volatility comes with strong opportunities for short-term traders, it is important to ensure that you practice good risk management. Diversification is an example of a strategy you can use to ensure that you are not fully exposed to a single industry, sector or stock, hence the greater profit opportunities.

Share.

About Author

Comments are closed.