Why History Matters

• How to study the past to set yourself up for the best chance of future success…
• The clues to look for to stay out of failed spikers…
• Read this NOW before the market heats up again…

Some people might try to tell you differently, but stock market history matters. 

We’ve all heard that ‘past performance is not indicative of future results.’ To me, that’s only partly true.

If history didn’t matter, there’d be no point in studying. All the top traders I know study every day. Yep, even me … So what does that tell you?

To start, you need a basic understanding of the market and why stocks move.

You can study how stocks have moved in the past to predict how they may run in the future. But it’s not an exact science. That’s part of what makes trading so difficult.

The idea is to use your knowledge to move in the right direction. Then, you get in safely and pay attention for a safe exit. Let me show you what I mean…

Be Skeptical of These Stocks

On September 2, Plus Therapeutics Inc. (NASDAQ: PSTV) gapped up on news. I saw it in premarket but wasn’t too excited to trade it.

Usually, a lower-priced gapper with news would interest me. But when I looked into its history I found a reason to stay out…

See how it only ran once in February 2021? If you can even call that a run. It was a little wimpy. By the end of the day, it had given back pretty much all its gains.

Since then, every time it gapped up on news, it ended up dumping. So when I saw it gap up last Thursday, I didn’t have high hopes. Here’s the chart:

Embed: PSTV chart 1-year, 1-day candles (StocksToTrade.com)

Sure enough, it opened and dipped a bit. Then it tanked the rest of the day after rejecting the breakout.

The dangerous part about this stock is it looked a lot like a gap and crap reversal. I could have gotten stuck in the dump if I hadn’t kept my expectations realistic.

Luckily, I checked the history and saw a warning to stay out.

Here’s another way to use market history. Lately, the gap and crap reversal strategy hasn’t been working that well. Stocks have been choppy.

If a pattern hasn’t been working, I’ll scale back my trading and get less aggressive.

We just left August behind — one of the slowest trading months. Sure, the calendar says September but that doesn’t mean everything will start running again.

Pay attention to what’s happening in the rest of the market. That way you can make more educated plans for individual stocks.

The Stocks You Want to Watch

When the market heats up again, there will be a lot to pay attention to. You don’t want to get distracted by the wrong stocks. So you have to figure out which ones are worth your time.

From my experience, stocks that have run in the past are the most likely to run again. So when I’m scanning in the morning, I try to stick to gappers that have a nice history.

I also try to stay out of historically choppy plays. Sure it might be a runner, but if it’s gonna give me a heart attack, the potential profits aren’t worth it.

Take a look at Globalstar Inc. (AMEX: GSAT). This stock has a beautiful history of running. Look at how it set a top back in January, then blew through it a month later.

The key difference between this chart and PSTV’s is how well it manages to hold its gains. This is definitely a runner that will stay on my watchlist going forward.

Tune in for My Webinars

Everyone who watched my September 2 webinar got to see how I handled PSTV. Don’t worry if you missed it. You can still check it out on the Wolf Alerts website.

Looking at a stock’s history can help you focus on the right plays. As I said before, we’re still in a bit of a slow market. But once things heat up, you only want to watch the most promising stocks.

Use the rest of this lazy market to refine your strategy and check your expectations. It’ll pay off once we start seeing more spikers.

Find the best plays,

Roland Wolf

Editor, The Wolf’s Den

P.S.

*All content in this newsletter is intended for educational and informational purposes only.

The material in this newsletter is not to be construed as (i) a recommendation to buy or sell stocks, (ii) investment advice, or (iii) a representation that the investments being discussed are suitable or appropriate for any person.  No representation is being made that following The Wolf’s Den’s strategies will guarantee a particular outcome or result in profits.  The price and value of stocks may fluctuate depending upon various market factors, and, as such, the strategies used by The Wolf’s Den to adjust for those fluctuations may change without notice.

There are significant risks associated with trading stocks and you must be aware of those risks, and willing to accept them, in order to invest in these markets.  Past performance of any trading system or methodology is not indicative of future results.  You should always conduct your own analysis before making investments.

You should not trade with money you cannot afford to lose and there is a risk that trading stocks will result in a complete loss of your investment.  Trading stocks, particularly penny stocks, is not suitable for everyone and requires hard work, due diligence, capital, and substantial time to monitor the market and timely execute trades.