Adam O’Dell | Thursday, May 30, 2013 >>
Trying to keep up with news on pharmaceutical stocks is like that circus act where a unicycle rider spins a dozen plates on sticks. It’s enough to make your head spin. And that’s one reason why I’ve never focused on, or specialized in, drug stocks.
But in early April, my Cycle 9 Alert service identified Merck (NYSE: MRK) as a buy (more on that later).
So on April 2, I recommended a specific options play on Merck. Sure enough, since then, at least a dozen, significant news stories have hit the wire…
April 11: “FDA accepts Merck’s new drug application for Noxafil.”
April 23: “Merck signs agreement with Bristol-Myers Squibb.”
April 30: “Merck gets favorable Fosamax ruling.”
May 2: “Merck will buy $5 billion worth of its stock.”
May 3: “FDA approves Merck’s Liptruzet for hyperlipidemia.”
May 24: “Merck’s Parkinson’s drug fails, trials stopped.”
May 28: “Jeffries upgrades Merck to a buy, target increased to $54/share.”
Seriously! How can anyone keep up!? And what the heck is hyperlipidemia, anyway!?
I had absolutely no way of knowing which Merck-related stories would hit the market after I recommended the company on April 2. I didn’t know if they’d be negative or positive. Significant or miniscule.
And I sure didn’t know the company was about to announce a $5 billion stock buyback program.
Truth is, no one knows this stuff ahead of it hitting the news cycle.
So, in light of what some see as uncertainty – the “news unknowns” – how can Merck be a buy?
Because in early April, the healthcare sector was outpacing every other sector. It was ranked #1 on my Cycle 9 Leaders & Laggards Board.
Merck’s stock specifically was heating up and on the move.
My statistical research showed both the healthcare sector and Merck were strong “buys.” And I confirmed that the technicals were strong… they were.
So I followed my system… my rules… and made the call, advising 54 beta-testers to “go long Merck!”
And then I immediately gave myself a pep talk: “You. Will. NOT! Let. The news cycles. Spook you! Stick to the script!”
Up 84% in 20 Days
In hindsight, most of the headline-making developments worked to push Merck’s stock higher – initially more than 84% higher in the first 20 days. And that’s when I sent a Trade Alert to Cycle 9 beta-testers, recommending they lock in 84% profits on half of their Merck position.
But I can’t say it’s been easy sailing after locking in that quick, three-week gain. Shortly after, Merck’s stock price pulled back to just above where it was when we got in. Then, just as quickly, the stock was up another 8% in four weeks.
We’re still sitting on an open profit of about 64%. But the real victory is having the discipline to stick to our plan – through good news and bad… through the rallies and the pullbacks.
That’s the great thing about having a system.
I will never know tomorrow’s news today. And it’s a fruitless, uphill battle to even attempt staying on top of hundreds of stories on dozens of stocks.
But with a system, I don’t have to. Nor do you.
Instead of trolling the early morning news feeds, in search of the day’s movers and shakers, I run scans. Naturally, I use the algorithm that Cycle 9 is based on.
And every morning, at 6am sharp, I’m handed a “short list” of 10 to 20 stocks that made the cut for the day. This happens automatically. The scan runs itself. I just review the results. Confirm the technicals. And do a bit of additional research.
Of course, doing this analysis on a dozen or so stocks and ETFs is manageable. Trying to do this on 5,000 stocks… even 100… is a fool’s errand.
Thank goodness for systems! Using the automated tools I’ve custom designed for Cycle 9 Alert allows me to quickly and efficiently hone in on the very best short-term plays. Within minutes, I can identify and research the day’s most promising picks. All before other traders have put on their reading glasses.
I fully accept the fact that I’m going to miss a news story… that some other guy will catch wind of Merck’s share repurchase plan before I do.
That’s just not important to me. Nor is being the “first to know” even necessary for profitable investing.
At the end of the day, I want to KNOW that I made money. I’m okay with not knowing everything about everything else.
Mainly, because I know the odds are on my side.
Stack the Odds on Your Side
If you have read about my new trading service, Cycle 9 Alert, you know I’ve already back-tested the proprietary strategy I developed on 10 years of historical data, and that 54 beta-testers have been test driving the service since last November.
You see, I wasn’t comfortable just rushing this service out the door. I’m not the “ready… fire… aim” kind of guy.
Long before I ever put a single greenback into the market, I have to know I have an edge – a quantifiable, statistical edge – that shows the odds are in MY favor… not Wall Street’s.
That’s the entire point of having a system in the first place. It’s a proven entity – a methodical approach to cutting through the market clutter that typically makes losers of 95% of investors.
And it’s this systematic approach that led me, and 54 Cycle 9 beta-testers, to Merck.
And that’s what Cycle 9 Alert is all about… ignoring the news… cutting through the clutter… and, plainly and simply… …putting the odds in your favor!
So, if your head spins on a typical day of just trying to keep up… If you feel lost among the clutter of the market’s 5,000+ stocks… I sincerely invite you to join us at Cycle 9 Alert. I’m anxious to show you that there IS a better way!