1. New products, services or leadership : If a company has a dynamic new product or service, or is capitalizing on new conditions in the economy, this can have a dramatic impact on the price of a stock.
2. Leading stock in a leading industry group : Nearly 50% of a stock’s price action is a result of its industry group’s performance. Focus on the top industry groups, and within those groups select stocks with the best price performance. Don’t buy laggards just because they look cheaper.
3. High-rated institutional sponsorship : You want at least a few of the better performing mutual funds owning the stock. They’re the ones who will drive the stock up on a sustained basis.
4. New Highs : Stocks that make new highs on increased volume tend to move higher. Outstanding stocks usually form a price consolidation pattern, and then go on to make their biggest gains when their price breaks above the pattern on unusually high volume.
5. Positive market : You can buy the best stocks out there, but if the general market is weak, most likely your stocks will be weak also. You need to study our “The market talks. Listen, to spot the best.” – Module 8 and learn how to interpret shifts in the market’s trend.
6. You should not buy on dips : This is a strategy that doesn’t give you a strong probability of making a profit. Remember a stock that has dipped 25% needs to rise 33% to recover the loss and a stock that has dipped 50% needs to double to get back to its old high.
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DISCLAIMER: Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. we assumes no responsibility or liability from gains or losses incurred by the information herein contained.
