How To Maximize Returns Through Active Trading: Matt Maley At Benzinga's Global Small Cap Conference

At the Benzinga Global Small Cap Conference on Thursday, Matt Maley shared ways that investors can use fundamentals and technicals to maximize their shareholder returns.

Maley is chief market strategist at Miller Tabak and author of the Benzinga Stock Picks Newsletter.

Maley On Investor Strategies: When the market turned down years ago, there wasn’t much investors could do, Maley told the virtual Benzinga conference.

The market has expanded to offer new options and ways to protect your portfolio, he said. 

Investors can also use fundamental and technical analysis together to maximize returns and minimize losses.

“Fundamentals are more important to long-term investing and technicals are more important for the short- and intermediate-term trading … but it is essential to combine them together to maximize one’s returns,” Maley said.

Maley On Using Fundamentals: Investing with fundamentals includes looking at the overall story of a stock.

This could include the sector that the company is in or recent news items. 

Fundamentals can also include valuation items like price to earnings, price to sale and price to book. Other fundamental metrics include earnings per share, cash levels, debt levels and correlations to other stocks in the sector.

Related Link: Why This Strategist Says Starbucks Has The Most Upside In Restaurant Space

Maley On Using Technical Analysis: Technical analysis trading is based more on momentum. Traders can use charting metrics like moving averages. Maley recommends using the 200-day moving average, 50-day moving average and the 20-day moving average.

Maley gave the example of using day moving averages for a winning trade in Bank of America BAC.

Another technical analysis strategy is to use the trend line.

“Always make sure that a trend line or any support/resistance level is broken in a meaningful way,” Maley said.

Head fakes can occur where the trend is broken very shortly and then returns, he added.

Maley pointed to the U.S. 10-Year Treasury breaking its trend line in December 2020. Interest rates were below 1% and then, as they broke the trend line, shot up to over 1.5% in March.

Another technical analysis strategy is higher highs and lower lows.

“This is the key ingredient in momentum investing,” Maley said.

An example of restaurant company Darden Restaurants DRI was used showing the stock continued to show higher highs and lower lows at it kept going higher and higher.

Relative strength index, commonly referred to as RSI, is another item used to measure the speed and strength of recent price movements.

Maley said RSI above 70 shows a stock is becoming overbought and below 30 shows a stock is becoming oversold.

An example using RSI was ViacomCBS Inc VIAC which had a RSI of 100 and was “ridiculously overbought.” Shares fell and puts that Maley recommended were up 2,500%, he said. 

Maley's Recommendations: Maley told viewers that if you add to a losing position, you’ll still have a losing position and likewise if you add to a winning position, you still have a winning position.

“Do not be afraid to pay-up for more shares,” Maley said.

Using your average price as a stop out level can minimize losses for shareholders, he said. 

Recommendations from Maley using fundamentals and technical analysis are Synchrony Financial SYF and Inovalon Holdings INOV.

Synchrony Financial has shown higher highs and lower lows and the story is its partnership with Paypal Holdings PYPL, he said. 

For more from Matt Maley, sign up for the Benzinga Stock Picks newsletter.

Posted In: Benzinga Global Small Cap ConferencefundamentalsMatt MaleyRSItechnical analysistrend lineNewsTechnicalsEventsTrading Ideas

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