5 Tips on How To Use Fundamental Analysis

5 Tips on How To Use Fundamental Analysis

5 Tips on How To Use Fundamental Analysis

Something you should have a, I would call intermediate education in is fundamental analysis.

Now the great thing about penny stocks is you don't need to get crazy in depth when it comes to the fundamentals but you need to have a working knowledge and you need to understand how the game gets played.

Today, I'm going to talk about the top five things to look for in fundamental analysis.

All right, everyone I'm lead trainer with stocks trading, Tim Bowen.

Today, we're going to be breaking down fundamental analysis and why you should care and the biggest things you look for.

So, as I mentioned in the introduction, um, I think that, um, I don't know, foul maybe fallacy is the right term look we'll go with that.

There's this fallacy out there that you need to have like this ridiculous ability to go through a balance sheet or an SEC filing, or or really understand the fundamentals of everything when it comes to the finances of of these low price, momentum stocks and listen.

what I want you to do, I want you to understand this stuff and know it definitely check out some

of the other articles I've done on the channel talking about fundamentals, um check out the Steady Trade Team if you really want to get in depth in it.

But that being said, don't go down the rabbit hole of of just consuming all your time because all of us know, hopefully, you know, maybe maybe I'll teach you that in this article.

But most of us know and and all seasoned day traders know that that there's always a disconnect.

You know, one of the reasons we trade these wild movers is they're disconnected from reality for a short period of time.

That's what makes these stocks such great longs on the front side, when the news hits and when they're disconnected from reality.

And then, Hey, from a short-selling perspective that's what makes these things incredible shorts.

Because at some point.

This'll show my Midwest uh uh breed here but at some point the chickens come home to roost as they say, and the fundamentals catch up and the stock becomes undisconnected.

So I want you to understand what's going on what's happening, but don't become too biased.

Recognize price momentum, recognize volume rom momentum, recognize hot sectors.

You know, if you watch these articles, you've you know how I just pound and pound and pound on hot sectors because when the sector is hot, whether it be weed or electric vehicles or psychedelics or cryptocurrencies you know, we look for those disconnects from reality.

Okay? So that being said, let's talk about the top five things you're going to look for because these are the big things you need to focus on and don't get trapped in that rabbit hole.

Next thing you know, you'll, you know, you, you go you go down those internet rabbit holes.

Next thing you know, you're looking you're spending three years, the woods looking for Bigfoot or you're, you know, chasing down every alien theory.

First thing we want to do is we want to just read and interpret the news.

So VUZI of VUZI many of you might be familiar with this stock.

It's been a very recent runner, recent momentum stock and guilt.

So everything I'm going to be doing is from stocks to trade, check out the trial.

Okay. If you get the trial you get full access to everything in the package.

And ultimately, I mean you've heard me say it a million times.

I think everything you need to day trade is there.

So that means that we can see VUZIX introduces one of the world's tiniest and most advanced micro led display based production engine at SID, which is some sort of conference Inclusive of a new technology articles overview.

So what I'm getting at is this is very buzz wordy stuff.

You know, smallest, most advanced, led displays, projection engine.

And so what we like about this AR okay and heads up displays, athletic eyewear, you know, so that's what's great about this is we can quickly recognize that they're playing the game.

And that's what we like. Now, again and I'll probably repeat this five times in this article we're looking for short term moves, okay?

I'm not believing in their AR headset and holding for five years.

What I'm looking for is stuff that's going to get traders excited and they're playing the game.

Notice first paragraph they're dropping like every buzzword you can think of.

So this is what we're looking for on a momentum stock.

You know, if you remember, if you recall VUZI depending on when you're watching, this was one of the wildest runners last winter, you know going from Jesus broke out at $4 and 50 cents in the middle of December, went to 30 bucks, pulled back hard. 

But look at this bounce today at 10% bounce stocks currently above VWAP also hitting the high day.

Any, anything significant there, you know, stock trading unusual volume, recent runner above VWAP. Big gainer.

That's held ground sideways through the day and is hitting the high of the day at 1:38 PM, which is basically 2:00 PM.

Some of you may have heard that rundown before but anyway, that, you know, this was on our radar this morning in the Steady Trade team, again because they're dropping all the buzzwords.

That's what we want. 

So look for that in the news.

And again, it's built right in to stocks to trade.

If you go to the info tab, you've got it right there.

You've got your SEC filings.

You've got your statistics breaking down their finances, sales, short, float, et cetera.

So next thing we want to do is look into the exactly that. 

The key statistics.

So, you know, there's a lot of data here a lot of stuff to look at.

I want to talk about the things you care about.

Ultimately, the big thing we care about, do they have sales?

You know, do they actually, I mean, are they do they have actual revenues?

You'll be surprised. You might be. You might be.

If you're new to this game, if you're new to penny stocks you might think, well, they're a publicly traded company.

They have to have revenues. 

In biotech stock land, which is, you know, listen a significant majority of penny stocks are biotech stocks by far majority of them, zero revenue, zero.

Okay. They, they, they don't they don't even have a product to sell.

So I look at VUZI 12 million in revenue, billion dollar market cap.

That's incredible.

So I, I like that they have sales.

Okay. They got 12 million sales, but here's a great example.

Talk about a disconnect from reality.

You know, they, they have 12 million in sales a year and they're currently sitting at a billion dollar market cap.

Love it.

But that being said, I'm checking a box.

They got real sales, other things.

We're going to look at profit margins.

You can see they're a money loser.

You, we're looking at cash.

They actually have a decent amount of cash sitting at 132 million.

I mean, that's not bad cash balance for a for a speculative technology company.

Other things we're looking at debt ratio.

And then we're always going to look at the float.

And then the, you know the percentage of float held by shorts.

Now, remember that is lagging data.

Okay. I think a lot of people think that that the short float data is real time.

We're not there yet.

I think we're getting there.

And when I say we as a market this isn't just stocks that trade to me.

Any, wherever you look, if you're looking at Yahoo Finance, Google Finance, another platform, SEC filings your short percentage of float is lagging data because it only gets reported a couple of weeks down the road, but it gives us a general reading.

We can see 15% of the float was short at the point that this was reported. Pretty high.

So, so that's what we're looking for.

Again in day trading, we're looking for these heavily shorted stocks where people are trapped because they see the disconnect between, you know a money losing company with a billion dollar market cap.

Next thing we talk about is I want you to looking for trustworthy, good data, okay.

And ultimately, listen, you're going to and I won't name names, but many of you might be familiar and we have some of them in the stocks of trade news feed.

I mean, there's some pretty pumpy websites out there and it kind of bums me out.

Cause there's some names and they're listed here that you know, years ago they used to be very dependable but it's just gotten, you know not to get too philosophical, but you know the world we we're in right now is such a click bait world.

And I've seen a lot of these websites that used to offer good information, have just gone to like click baity stuff.

I mean, I mean, I'm guessing you guys know what click bait is, you know, it's like, Oh, you know teen superstar, what do they look like now?

You know, those pop-up ads.

And you know, a lot of these finance sites have gone that route.

But the nice thing is you can go buy confirmed news feeds like PR Newswire okay, Canada Newswire, there's legitimate.

You know, the SEC filings are always, the ultimate are, are are arbiter of, of, of reality, you know?

No, well, I should, I almost said nobody lies in their SEC filings.

People lie in their sec filings, but they go to jail.

So most, most companies don't lie in their SEC filings but look for reputable sources like PR Newswire and then the great feature that's built in to stocks to trade is Breaking news. 

Okay. This is a great Way to get that trustworthy news because what's awesome about Breaking News and I'll go quickly.

You might be familiar with it.

We've got two analysts with over 25 years of market experience of reading the news.

So what they do, they're articles all these feeds.

They know the click baity sites.

They know the penny stock pumpers.

They know the Twitter pumpers, they know the chat rooms.

So what they do is then aggregate real actionable trustworthy data and drop it in the breaking news chat.

So check that out.

We'll have a link below.

I think it is, especially if you're new because you might've been looking at that list of news feeds and you'd be like, well, Tim you said you wouldn't name names.

How do I know which ones I tell you?

The Breaking News chat is the best way to do that because these guys are only going to drop you actionable trustworthy info.

Next thing you want to focus on is, you know that that undervalued stock or or I shouldn't even say overvalued stock, you know, again what we're looking for is disconnects from reality.

So it's actually, and I know this might be so counter-intuitive to you, but one of the reasons I chose VUZI was that absolute disconnect from reality.

Because what that does is that brings in you know, short sellers, particularly, that look on that bal, look at that balance sheet and become fixated with the balance sheet.

I mean, listen, another great example is the meme stocks or meme stonks, sorry. 

You know, GameStop.

I mean, if you look at the financials of GameStop it is an ax murder.

Okay. Do not let yo do not let your children look at look at any of the financials of GameStop that that's not young people shouldn't be subjected to that.

But I mean, here we are six months later and the stock is still up, you know, from, you know what. It started the run and, and, you know, a year ago four or five single digits, you know it was in the teens at the end of the year.

Here we are still at $185 today.

Stocks still green again today, or even AMC.

I mean, movie AMC movie theaters.

Doomed. Doomed doomed doomed.

This stock just spiked from 13.50 to 14.67.

Again, it's green again.

It's not far, you know, it's at a multi-month high.

So look for these stocks that are heavily shorted with that disconnect from reality.

And the key is just don't be a true believer.

Day trade them. Trade the chart patterns, okay.

Breakouts, VWAP holds, dip and rips. And then be done with them at the end of the day and retrade them.

I mean, if you were a day trader in a GameStop or a AMC, I mean these things have been day tradable stocks 80% of days since February, since December.

Next thing is kind of what I, you know I kind of segwayed into it but the fifth most important thing is combine the technicals and the fundamentals.

And I kind of hinted on that a minute ago when I talked about focus on the chart patterns, okay.

Ultimately back to VUZI is that example.

We want, we want a story.

We want a reason for people to get excited.

Then we interpret that. We see the buzzwords.

We look at the chart, we look at the volume we know the past history of the stock.

And then we're going to combine that with the intraday chart patterns.

And you know, you, you noticed I got excited when I started the article.

The stock is above, above VWAP.

It's a few cents from a higher day. It's 2:00 PM.

If this breaks that high day, it's going to squeeze and probably going to gap up again tomorrow because that news just dropped this morning at at the market open.

There's a lot of traders that didn't see that.

It's probably going to get disseminated. Who knows.

It'll probably get mentioned in the mainstream media.

So when you combine the chart patterns with the fundamentals and a skeptical eye, okay, listen.

VUZI is going to crash at some point.

That market cap does not support 11 million or 12 million in sales.

This new product, who knows, they might not ship that for years.

But if you can combine an understanding of the fundamentals plus the intraday chart patterns, which check out my ebook.

We'll link it below. The 10 trading patterns you need to go.

Know, there's five long patterns.

There's five short patterns combine the two I call it techno-fundamental-analysis Sounds kind of corny but it works.

Techno-fundamental-analysis. Mashing them together.

I probably need some sort of better acronym.

But, but yeah, I think, you know, listen if you watch me on pre-market prep you'll see me every time I'm looking at that news.

I'm looking at the quick balance sheet, that key statistics as we call it. I want to know, are there sales?

Are there? What's the debt? You know.

There's just a few things that you once you get a system down, you can quickly scan them. And this doesn't take time. Okay.

Ultimately, listen, we're making snap decisions but I think the more you repeat the process the more you work on that OODA loop, O O D A okay.

Google OODA loop by Ratty Boyd was innovated it.

But it's that idea of looping through the process to improve it, shorten your time, and increase your accuracy.

That being said, if you liked the video, drop me a like and check out the Steady Trade Team.

You know, I went fast, talked about a lot of different concepts here, but if you hit that link below you joined the Steady Trade Team I do two webinars a day, every single trading day.

There's so much to go over so much to learn.

The great thing about it with those two webinars, you're never more than a couple hours away from getting your question answered.

Check out the Steady Trade Team and

I look forward to seeing you on the next article.

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