Monday, December 6, 2010

Best Stock To Buy Right Now

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So today I decided that the best stock to buy right now is Walter Energy, Inc. (NYSE: WLT). WLT broke out today up 4.16% on volume 132.77 % higher than average. It closed today at $115.12. It sports IBD Smart Select Ratings of 80+ and A or B. Earnings are up 471% over the prior quarter. While I like the stock's ratings, I do have to say that I'd prefer to buy a stock that is priced in the $15 to $50 dollar range. But of all the stocks today, I felt it was the best one to buy based on it's technical chart. It broke through what I considered to be a long term price resistance today on strong volume.

This is the first stock that I will be purchasing with real cash. As you might know, I had been using a stock simulator up until this point. As you might also know, I am a strong advocate of investing with real cash as soon as possible. Practice as long as you feel is necessary. For me, I am ready to move to real cash and learn from real market action. This is the best teacher.




While there are many opinions on how much cash you should invest, if you are just starting out, you are going to have to bend the rules as far as the recommended position sizes go. What I decided for me was that I would invest in a $1000 block for my first trade. What this means is that I can purchase 8 shares of WLT.

I am going to set up a profit target of 20%. This will make my target sale price ($115.12 times 1.2) or $138.14. At the same time, my loss limit will be 7% of my purchase price ($115.12 times .93) or $107.16. I will only be invested in one stock at a time.

I'll keep you posted on my first stock market investing purchase with real cash. Good luck on your own.

Best CANSLIM Website

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Many of my readers ask me, what is the best CANSLIM website. To me, that's an easy question. While there are many websites that talk about CANSLIM, the best by far is investors.com. You'll find all the tools you need to make money in the stock market right on that website. Now there are some websites that will help you implement the CANSLIM strategy and you can definitely learn from them, the IBD is the expert. Here are my reasons why it is the best.

  1. William O'Neil founded it. He developed the CANSLIM strategy and developed the paper in such a way to help you practice what he preaches.

  2. Stock screens. Each and every screen in the IBD is setup to bring the best CANSLIM stocks to the surface. Get to know them as well as learning how to determine the overall market direction.

  3. The help section. The help section of the website provides answers to the most frequently asked questions about CANSLIM. You can learn a lot from reading these help files.

  4. IBD TV. There are numerous videos that you can watch to help you learn how to make money in stocks.

Don't overlook the value of learning from the master of your investment strategy. For CANSLIM investors, that master is O'Neil. If you want to make money in stocks, start applying what he teaches.

  • Pick up a copy of How To Make Money In Stocks.

  • Read it from cover to cover. Read it again and again.

  • Also pick up a copy of The Successful Investor, it lays it out in a simpler format.

  • Subscribe to the Investor's Business Daily and study it every day.

  • Start using a stock simulator and buying stocks you find.

  • Watch how they perform and learn from mistakes you make.

  • Fine tune your buy points by focusing on one chart pattern. Don't try to master all patterns at once.

  • Move to real cash as it's the best teacher.

  • Learn from your mistakes. You'll discover that finding canslim stocks to buy is the easy part. Buying them at the right time is the hard part.

Those are some tips I have for you regarding your stock market investing program. Good luck!

Which Stock To Buy Today

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OK. So, it's time to look for which stock to buy today. I thought what I would do is kind of start from scratch here and let you know what I would do if I was starting from scratch looking for a potential stock to buy right now. Let's talk about what not to do. Don't fly buy the seat of you pants. Don't take tips from your neighbors. Don't buy the stocks that Jim Cramer tells you to buy. Don't listen to the media period to tell you the truth. If you haven't figured out that they don't have your best interests at heart, you are either a young child or a naive person. Sorry, it's the truth. If you let others guide your investment strategy from here to there without any direction, then you probably won't have much success in the market. Here's my step by step guide of what I do to find a good opportunity.

  1. Pick an investment strategy. In my case, I have chosen CANSLIM. You have to choose a strategy. Choose from the masters and start working to master what they have already mastered.

  2. Only invest when the market is in a confirmed uptrend. According to William O'Neil, 3 out of 4 stocks follow the market. If the market is going down, you will probably lose money. Go with the flow and you increase your chance.

  3. Screen for stocks to add to your stock watch list on a daily basis. No matter what the market conditions, constantly tend to your watch list of stocks that meet your fundamental criteria.

  4. Watch these stocks for breakouts on a daily basis. Review the charts of the companies that are up in price AND up in volume by a big percentage. These are your leaders.

  5. Start reviewing stock charts and identifying potential buy points. Practice with a stocks simulator before investing real cash to get your system set up. Once you are comfortable with daily setup, start working with real cash. Real cash teaches real lessons. Move to cash as soon as you can.

  6. Set profit targets and set loss limits. Set a profit target of 20% and a loss limit of 7%. Once your stock crosses one of these thresholds, sell it.

  7. Focus on a setup. Keep it simple. Look for one specific chart pattern and look to copy it. For example, focus on the cup with handle pattern. Master it. And master it one component at a time.

Follow these tips to get started with your stock market investing program. It will take effort and study. Put in both and you'll find you will be mastering your strategy bit by bit. With mastery will come small victories. With small victories comes confidence. Learn to build yourself up while learning from your mistakes. Go for it.

CANSLIM Screener

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Now that the market has turned, you want to become a CANSLIM screener. I have found that the best canslim stock screener is the Investor's Business Daily. Each and every day, you'll find several screens that can help you out. You can choose to use one of them or a combination of all of them. I have read of people using them all and making one big list. It's also a good time to look at the IBD because they are having a FREE trial. So swing over to investors.com to check that out.

I know from my own experience that the sheer volume of information available in the paper each day can be overwhelming. The best place to start are the main screens you'll find on a daily basis. Let's look at those.

  1. Stocks on the Move - This screen identifies stocks that are under accumulation by institutions. There backing is what drive's the price of stocks higher more than anything else. You want to time your buys and get into stocks as they do. Ride their coattails to higher gains.

  2. Stocks in the News - This screen identifies stocks that are closer to potential buy points. The nice thing about this screen is that it gives you a handful of stocks that are forming bases. You can view the charts and most of the fundamentals.

  3. Time Saver Table - This screen identifies stocks that are up substantially in price. If you are short on time, check out this screen for potential stocks to add to your watch list.

  4. IBD Research Tables - In the back of the making money section, you'll find the IBD tables. If you check out the top 6 or 7 sectors, you'll also find stocks to add to your watch list.

The ideas in these CANSLIM screens will provide with more than enough buying options. But the mere fact they show up doesn't necessarily mean that they are prime buy candidates. You should also look at each companies fundamentals and stock chart to see if it is fundamentally and technically the best stock to buy.

Good luck on your stock market investing program. Let me know if you have any questions.

Market In Confirmed Uptrend

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The current outlook was changed to market in confirmed uptrend by the editors of the Big Picture column in Monday's edition of the IBD. The mood from the writers suggested to me that while they did change the outlook I wasn't convinced they felt the change would be for real. However, opinion of what the market is doing is not what matters. The only thing that matters is the rules of CANSLIM. And currently the experts suggest the market has turned for the better. Our job as an investor is to heed only what the market is telling us and nothing else.

Here's the problem. While our gut might tell us that this is a false signal, we must treat every confirmation as the real deal. You never know what the future holds. It's a battle of our emotion over the cold hard facts. The reality is that this is actually hard to do. But getting a handle on your emotions is key if you are going to make money investing in the stock market. OK. So, I know you know that. What do you do now that the market has changed direction? Follow these steps.

  1. Treat every uptrend the same. Once the market has confirmed an uptrend, start actively buying stocks again. Look for leaders breaking out on high volume. Each and every day, you should be adding and deleting stocks on your watch list. This is the first place you want to look for potential stock buys.

  2. Start watching the market for distribution days. If the market closes higher on higher volume, this is your clue to dig deeper. Read the Big Picture column daily. Watch the IBD TV Marketwrap video. Analyze the indexes on your own and learn how to read them on your own. Confirm what you think in the Investor's Business Daily.

  3. Follow sound selling rules. Remember to set a loss limit of 7-8% on every purchase. In addition, set a potential profit target of 20%. Keep your losses small but when you are correct try and ride those out.

  4. Look for stocks that are breaking out. I consider a breakout to be at least a 2% increase on a volume increase of at least 50%.

  5. Identify the best buy points to buy these stocks. Don't buy stocks that are overextended in excess of 5% of the pivot point.

Now that you have the green light, it's time to get busy on your stock market investing program. Learn to follow a system and not your emotions. This will provide you with the best results over the long term.

Thursday, December 2, 2010

Free Access To Investors com And eIBD

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I thought I'd take a second here to let my readers know that Investors.com is offering free access from November 29th through December 12th. This is a good time to test drive the paper and the tools available on investors.com. The best thing is that you can use the full version of the paper in digital form. In the paper, you'll find the valuable features like the Big Picture column and the Stocks on the Move. You'll will also have access to the eTables service where you can download the IBD 200, IBD 85-85 and the IBD 100 as well as the main tables.

Using the Investors Business Daily is the cornerstone to the CANSLIM stock market investing strategy. Swing over investors.com today to check it out.

Sunday, November 21, 2010

Buying Stocks For The First Time

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If you are intimidated about buying stocks for the first time, you are not alone. A lot of people are intimidated by the stock market and are just not really sure where to begin. Most of the research I've read online spends a great deal of time teaching the beginner how to set up a brokerage account, how to fund it and execute a trade. But, the real trick to being successful at investing starts with some basic fundamentals that begin before you invest a dime of real money.

The first thing that I suggest is that you pick a strategy. Aimlessly buying stocks based on tips from friends, watching Cramer's Mad Money will probably frustrate you because you are basically investing without a plan in mind. The nature of the stock market is that it punishes those who don't study it and learn from their mistakes. Don't let this be you. When it comes to stock market investing strategies, there are three basic ones. They are growth, value and income investing. I'd also throw momentum investing in there as well, but I myself consider that a form of growth investing. Of these types of strategies, I prefer growth and upon doing my research to find a suitable strategy have adopted the CANSLIM approach developed by William O'Neil. Do some research and find an investing technique that you like. Once you've done that, put the blinders on and don't look back. Start your process to master it.

Let me walk you through the steps I took before I bought my first stock. The first thing I did was read everything about I could about my strategy and wrote down the steps I would need to take on daily basis to implement it. I worked on one step at a time. For example, one of the first things I needed to do was determine the direction of the stock market. My investing strategy calls for me to only invest in a market that is an uptrend. I spent several months working on understanding how to watch the market indexes before I did anything else.

After that, I needed to start screening for stocks that met my criteria. There are thousands of stocks to choose from and your goal is to narrow down the number of stocks that you need to look at on a daily basis. You do that with a stock screen that helps you find the stocks that meet what you are looking for.

Once I narrowed that down, my next step was to start looking at charts to see the best buy points for the stocks on my watch list. This is proving to be the most challenging areas of CANSLIM. To gain the experience that I needed, I started using a stock simulator to learn the mechanics of how to buy stocks. I then would watch the performance of these stocks to see if I needed to sell them because they had dropped in value or because they had reached a predetermined profit target.

Even with a simulator, this is not an easy task. I know that I had a stock recently that went up 29% and instead of selling it, I watched the gain evaporate. I did sell it at a 10 percent gain but I learned from my mistake and will sell a stock like that the next time I see that situation.

Once you've streamlined your process and started gaining experience practicing, the next step is to do the same thing with real cash. It's at this point, I'd open up a brokerage account. Personally, I use TD Ameritrade. Keep in mind that it will take a few days to get it funded.

So there's what I would do if I were buying stocks for the first time. Pick a strategy, start practicing, make some mistakes and then repeat the process with real money. Good luck on your stock market investing program.

Thursday, November 4, 2010

Why I Think You Should Be Investing In The Stock Market Today

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I guess that I want to go on record here and say why I think you should be investing in the stock market today. Yesterday, the Federal Reserve decided to pump $600 billion dollars into US Treasuries. I thought the timing of the decision was especially interesting coming a day after the elections. Anyway, it's my feeling that this will decrease the value of the dollar. A weaker dollar in my opinion will lead to the stock market to go higher. Because of this I am bullish on investing in the stock market right now.

The markets are a global market place and because of that I also think that the value of the stock market represents it's global value at any given time regardless of currency. Here's how I look at it. If the Fed yesterday came out and said they changed the value of the dollar to 50 cents, wouldn't it stand to reason that if yesterday you charged $10 dollars for your product, you'd double it to $20 dollars immediately. You would after all, want to still have a value of $10 for your product.

While in the United States, the value of the dollar is all what we in the United States perceive it to be, those in the rest of the world see it as a bargain and this will affect prices in two ways. One it will increase global demand. Two, the people selling their stocks will know that it's worth is actually being misrepresented. These two factors mean that the stock market will probably go up in my view.

The only problem with my theory is that the market could have already priced in the news of the Fed's decision. While I think that this is possibly the case, I actually think they will end up buying more Treasuries than they announced.

So, let's see how things play out. Keep in mind that when you reviewing your stock market investing plans, to always keep an eye on the current outlook and only invest when the market is in a confirmed uptrend. Because my opinion doesn't matter. What does matter is what the market says on a daily basis - not me.

Wednesday, November 3, 2010

At What Percentage Drop Should I Sell A Stock?

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I’m back today to answer one of my reader’s questions which was at what percentage drop should I sell a stock? I guess the answer to that depends on whether you just bought the stock or have had it for a while and it’s had a run up in price. I take my general rule of thumb from the CANSLIM strategy which is to cut all losses at 7-8% of my purchase price.

In practice however, I think it’s wise to sell a stock sooner if you feel it’s not acting right. By not acting right, I mean that it shows signs of institutional selling (closing lower on high volume). Also, you’d want to sell sooner if the general market direction turns into a correction.

Deciding when to sell after a run up is a little more difficult. I suggest again that you pay attention to the price and volume action of the stock. If the stock’s price declines on more days that it rises, it’s time to take a close look at selling that stock. Also, if it’s had a significant run up in price, don’t hesitate to lock in your gains if you feel something is not right. There are plenty of opportunities in the market.

Ultimately, what you have to do is set some general guidelines and after that you have to let experience be your guide. Here are the steps that I would take to fine tune your skills in buying and selling stocks.

  • Set a hard and fast rule that you will sell any stock if it goes 7-8% below your purchase price.

  • When the current IBD outlook is changed to “market in correction” sell all of your stocks regardless of their gain or loss.

  • Once a stock reaches a 20% plus gain strongly consider selling it.

  • Keep a trading journal that you can review your winners and your losers.

  • Check the chart’s for the stocks you sold a month later, two month’s and three month’s later to see if you sold to soon.

  • To gain more experience, use a simulator.

Most of your problems in determining when to sell can be solved by picking better entry points. Spend your time identifying proper buy points and improving your recognition of chart patterns and you’ll get stopped out less.

I’d also suggest that you focus on what I call your “batting average”. Keep track of all your stock buy and sells. Shoot for a 1 in 3 or better average. I like to classify my trades as follows:

  • Outs: Any stock trades that I have a loss or only a small gain.

  • Singles: Any stock I sell with a 20% gain.

  • Doubles: Any stock I sell with a 40% gain.

  • Triples: Any stock I sell with a 80% gain.

  • Home run: Any stock with over a 100% gain.

When you are new. Focus on hitting singles. You’re working on getting on base. After you’ve gained some experience, pick your entry points better. Review your at bats and see if you could have stretched those singles into doubles.

On the flip side, review your outs and see if you could have recognized when to sell sooner or maybe improved your buy points.

I hope that helps you improve your stock market investing results. Let me know if I can help in any other way.

Saturday, October 23, 2010

Why Is The Stock Market So Good Today?

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A friend of mine asked me why is the stock market so good today? He’s been reading about the market trending higher. He was one of my friends who lost so much money in the last bear market. I think many people thought there would be no turn around. But everything runs in cycles and the stock market today is much higher than it was a couple of years ago.

Even though the stock market today is higher, you still have to pay attention to the overall market trend as it can change anytime. You do this by reading the IBD every day, checking out the day’s action on the charts, watching the IBD TV market wrap and reading the Big Picture column. The Market Pulse has a current outlook available each day. You want to pay attention to this on a daily basis and only invest when the market is a confirmed uptrend. If you do that, you’ll see your results improved.

The stock market today might be moving with the dollar.



Aside from that, I think there are a few reasons that the stock market is probably doing better. The first is that companies earnings have improved. This translates into higher stock prices. The second reason is low interest rates. Low interest rates are good for the stock market today. You can see that when interest rates rise, like they did in China this week, the market reacts by falling. Once the Federal Reserve Bank starts raising rates at some point, you’ll see the market fall. The final reason that I think the market today has been going higher is because dollar has been falling. I think that when the dollar falls it pushes the stock market higher in the short run. I think this because the inherent value must level out. The value of the stock is the same even if the dollar is worth less. You can see on the chart that the dollar strengthened recently and the market didn’t do as well as it has been.

But the usual reason that the stock market rises is because the “big money” or institutional money has been buying stocks. When this happens, the increased demand forces prices higher. You can see this in the form of higher closes on higher volume. Watch the charts of the major indexes daily and watch for this tell tell sign of why the market might be doing better today.

Anyway, that’s my perspective. Good luck on your stock market investing program.

Tuesday, October 19, 2010

Buy And Sell Stocks: How To Lock In Gains

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You've got to learn how to buy and sell stocks in order to make money in the stock market. You can't expect to buy individual stocks, hold them forever and make money. Eventually your stock will come down in price. This is because the stock eventually falls out of favor with the institutions that pump money into stocks which in turn drives up their prices. I wanted to show you an example of this specifically with a stock that I bought awhile back and sold today. This articles is part of a larger series that I am putting together called Buying Stocks - A Case Study. You can find the last four posts by visiting these links.

Stocks To Buy
Good Stocks To Buy
How To Buy Stock
Hot Stocks To Buy

You've got to buy and sell the stocks you find to take paper gains and turn them into real ones.




On September 20, I bought 30 shares of MSB for $33.33.  Now if I was a buy and hold investor, I would ride this stock through thick and thin because that's what Wall Street has taught the vast majority of us to do. As I've said before, I think they do that because they know that most of their brokers have no clue when you should sell and their also probably too swamped to give you that kind of personal attention anyway. Going back to my rule that you should do what Wall Street does and not what they say, you'll learn that mutual fund managers don't buy and hold forever, they figure out when to buy and sell stocks in their funds. If you are buying individual stocks, then that's what you have to learn as well.

Learning how to buy and sell stocks is an acquired skill that combines your experience with some luck as well.




Today when the market opened, I sold all 30 shares of MSB for $40.75. At the end of the day, the stock had dropped to $37.09 for a 10.02 percent drop in the share price. I on the other hand locked in a 20.06 gain because I sold the stock when the stock's chart told me that something was wrong. This was part luck and part analysis. But this is the kind of thing you will find out when you start investing. You will luck into some things and you will learn your way into things. A while back I had picked up another stock that rose 25 percent and I didn't pay attention and it dropped like a rock. When MSB went up 25 percent from my purchase price, I thought it might do the same thing. It didn't do it right away, but I started watching it for signs of selling.

Learning when to buy and sell stocks properly will make you a lot of money.






If you look at the daily chart to the right, you can see that the stock had a pretty nice run even before I got into it. At point number one on the chart notice that the stock closed lower on higher volume (point 2). I was concerned then because this is a sign of selling. I noticed though that it closed at the upper range of the high for the day, so held onto it. A few days later, I noticed that it closed lower on higher volume again. At point 3, it closed at the low end of the high low bar on the chart on higher volume (point 4). This combined with the weakness in the performance of my watch list worried me so I put in a sell order this morning so I could lock in my 20 percent plus gain instead of seeing it disappear completely.

You can see by looking at the volume that it spiked when the price closed lower. This is your signal that institutions are getting out. You should pay attention to them. Once they leave, the price could fall futher leaving you holding the bag.

Keep learning about investing in the stock market and keep me posted.

Sunday, October 17, 2010

How To Build Your Stock Watch List

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I've updated my stock watch list for this week. You can usually find the list of stocks I'm watching in the sidebar. I currently have 19 stocks on my watch list. I keep these in My Stocks Lists at investors.com and also keep them in my Google Finance account. I thought it would be a good idea to talk about how to set up and manage your stock watch list as well.

The first step in building a watch list is screening for stocks. Having already set up a specific way that I screen for stocks through the Stocks on the Move column in the IBD so I've got that covered. Once I take the stocks I find for the day that pass my additional screens for volume, SmartSelect ratings, earnings and sales and for float, I then add these new stocks to my watch list.

The next thing I do after that is then take the stocks already on my watch list and make sure that they still meet the same criteria to make the list in the first place. For example, if the Acc/Dis rating drops below a B- I then delete it off my list. I decided to do this because I needed a way to manage the list in such a way that it pruned itself. This seemed as good as any. This recently happened to the stock ARUN. I also had a position in this stock and decided to sell it as well.

Once you have this list, what do you do with it? I usually sort the list by price percentage change and start looking at them for proper buy points. If you have read How to Make Money in Stocks, you know that ratings are not enough, you've got to start looking for a proper setup. I do this by reviewing the chart for each stock on my list and looking for chart patterns like the cup with handle, the double bottom or a flat base. I'm also looking for stocks that have been under steady accumulation.

I think that it's worth noting here that when I do this review that I look at the weekly chart. By default, most charts on investors.com retrieve the daily chart. Once I feel I've identified the pattern, I flip to the daily chart to look closer at the volume on breakouts and to identify a pivot point. This pivot point is .10 cents higher than say the high point in the handle in the cup with handle pattern. For each pattern, you'll have to learn how to spot this.

This is by far the hardest part of the CANSLIM strategy. Do it right and you'll avoid getting into stocks that haven't set up properly and also you'll avoid getting stopped out because you bought the stock when it was overextended. You want to buy within 5% of a the pivot point. The way you get good at to start practicing it every day. You may not be right in your analysis but that will come with time.

Here's a good tip. Start looking at the charts of the stocks on your watch list. Then review the IBD's columns called the IBD 100 and the Weekly Review. Every week the stocks in the screens have mini charts that have a little note at the bottom that clues you into what is happening. Sometimes they say exactly the buy point that they calculated. Review what they say and get a bigger chart out and start taking a look at it for comparison. Do this every week and you'll improve. You'll also learn by making simulated buys of the stocks to see if they fall below the pivot points. Reviewing these practice trades will also provide you with an additional way to learn. In fact, I recommend that you constantly buy stocks in your simulator even if you are in a few stocks. This will enable you to see approximately where you would have bought it when you liked the stock in the first place.

The first step in utilizing your stock watch list is reviewing the charts for all of the stocks on the list. You do this so you can spot chart patterns and identify proper buy points.





Let's take a stock this week and have a look. Gulf Port Energy Corp (NASDAQ:GPOR) appeared on my screen Friday. It closed at $16.37 on volume 495.29 percent higher volume. You can see the chart at the right.

I believe that in looking at the chart that this could represent a double bottom base with the high point in the middle of the "W" is where you want to add your .10. This would give me a buy point of $14.81. Is my analysis correct? Honestly, for me I am not sure because only time will tell. This is the whole point. Don't worry about being right or wrong, just make a determination. With experience you'll improve your eye in looking at charts.

Now that I know my proper buy point, I want to make sure that volume surged as it crossed it. If it did, then I check the stock's current price. It closed for the day at $16.37. I want to make sure that if I put an order in for the stock that it's within 5% of it's pivot point. I then take $14.81 times 1.05. The result is $15.55. Since the current price is over that, then this stock is over extended from the buy point that I determined. Therefore, I wouldn't want to buy this stock unless it retreats in lower volume below that point. At that point I might reconsider.

While I typically do this with only the stocks up in price for the day on higher volume, it would be a good habit to do it with all of them to get a feel for how stocks form bases and what breakouts look like. A couple of other quick points before I wrap up today's post. One thing I like to do is see how many stocks were up for the day on my stock watch list. This gives me an indication of how well the stocks I'm watching are performing compared to the market. What I look for is a lot of up stocks when the market has a good day. If this is the case, I feel that I am looking at the right stocks.

The other thing I suggest is printing out the charts for stocks. Then you can make notes on the stocks, draw trend lines and review them later.

Good luck investing in the stock market. Let me know if you have any questions. For further review, you might want to check out my series called Buying Stocks - A Case Study.

Thursday, October 14, 2010

Hot Stocks To Buy

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I'm back in search of hot stocks to buy. The market indexes were all lower today but since volume was lower it didn't affect the current market outlook which is market in confirmed uptrend. Remember that the first thing you want to check each day is the market direction. You can find it every day in the Big Picture column. I always check the charts for each index daily at investors.com. So while the market didn't go up today, it didn't reflect any distribution. This has been a prolonged uptrend which is good for us as we want it to go for awhile so we can get our practice out of the way before we use real cash. So far, I've picked up 13 positions (including today's pick which I will buy tomorrow.) Two I've closed as they were stopped out. I'll review my positions in another post.

I've been still working on my Buying Stocks - A Case Study series. Here are four additional links to the previous posts in the series for your reference.

Best Stocks To Buy
Stocks To Buy
Good Stocks To Buy
How To Buy Stock

Finding hot stocks to buy today means more than fundamentals. It means finding stocks with proper setups.



For now, though, I turn my focus on finding hot stocks to buy today. I decided to add STR Holdings, Inc (NYSE:STRI). STRI was up 3.87 percent on volume that was 79.41 percent higher than average. From my calculations, the stock broke through a buy point of $24.60. It closed higher today at $25.47. It's extended about 3.5% above the pivot point which puts it within the 5% range you'd like to see. Otherwise the stock is to far extended from the buy point.

I'm going to set a price target 20 percent above my purchase point which I will know tomorrow once my market order gets executed. Also, I'll calculate my stop limit of 8%. I've been making all of my transactions after the market closes each day. I am doing this because I work during the day and it's hard to keep on top of all the hot stocks to buy now. I spend the after hours focusing on my screens and reviewing my stock charts. I'm starting to get a real feel for what I want to look at each day.

An additional tip that I would provide is to take a look at the stock charts in the IBD Weekly Review which comes out on Fridays. Each stock chart talks about the specific buy points the editors think apply to certain stocks. This is a nice feature of the paper and if you take the time to study their notes, you'll start to recognize how they calculate pivot points. In the chart above, it's .10 above the top point of the point in the middle of the "W".

As an additional note, I've added my current watch list to the sidebar for your review. Good luck investing in the stock market.

Tuesday, October 12, 2010

Good Stock Market Buys

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Once the market closes, I start looking for good stock market buys. I do this by checking my screens to see which stocks are up in price and up in volume. Those that are and that meet my additional screening criteria are then added to my watch list. I then take a look at the whole watch list and sort it by percentage price increase. This puts the strongest stocks that I find at the top of the list. What I am looking for stocks that are up at least 2 percent on more than 100 percent volume. Depending on the market for the day, I may not add many stocks to my list, I might find stocks that are already included or I might find stocks that didn't have an awesome day.

Today was a day when only added one stock. It was APKT. Let's have a look at a one of the few stocks that might make good stocks to buy today.

Even thought the market finished up today, I didn't see a lot of strength in my list. In looking at it, I found three that I wanted to look at closer today. Here's my analysis of APKT.

Finding good stock market buys starts with a keen eye for proper buy points.






The first stock is Acme Packet (NASDAQ:APKT). While the stock was up $1.00 today or 2.89%, volume was only up 4.07 percent. I've put a chart here to start what I consider the first step in deciding a proper buy point. While technically the stock broke out, it's not a huge breakout. Step one in my chart analysis will be using a weekly chart. It's easier to see patterns on a weekly chart and buy points on a daily chart. What I notice here is that the stock really didn't break out. In fact, it appears to me to be forming a new base. You can see at the top of the chart where I drew the blue line, once it reached the high point and started downward was the beginning of a new base. I would set a buy point of $40.68 on a big breakout depending on what kind of base it forms. Right now I wouldn't purchase the stock. Notice the large increase in volume on down days as well.

So, I'll keep this stock on my list as a potential candidate depending on what kind of base it forms. This is how investing in the stock market works. You've got to take the time to study what's going on. My advice, just get started.

Stockbee Membership: Is It Worth It?

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I had a reader ask me today about a Stockbee membership and if it was worth it. I checked the price of his site today and saw that it was $150 for 6 months and $225 for a year. I think that this is an extremely great value. To me that represents a value on par with a subscription to the IBD. One of the things that I think makes his membership such a great value is that he pushes you to make a system and take action. Also, what I really like about him is his belief that you can do it if you set out to master it. You'll find that just by focusing on the market every day and the individual stocks that appear on your screens. You'll learn more by doing and once you start investing, you'll learn by your mistakes.

Having Stockbee to walk you through this process is a great benefit. I think that what concerns people with his membership is that he offers no trial membership. It's easy to think that it might be some sort of scam. I talked more about his site on my Review of Stockbee post a while back.

If you are unsure, take the time to go back and read his blog. He openly talks about his methods right out in the open. Like most crafts that people try and master, you can openly give your stock market investing secrets out a lot of times and never fear that any one will apply them. Charge a membership fee, and this spurs people into action because they want results for the membership fee that they are paying.

In the long run, your money will be better spent with Stockbee than on some Forex system or options system. I almost forgot that he has a ton of testimonials on his site as well.

How To Find Stocks In An Uptrend Quickly

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A buddy of mine asked me the other day how to find stocks in uptrends quickly. One of the best ways to do this is to focus on building a watch list every day from your stock market screens you set up. For me personally, what that means is that what I do is look for stocks that appear on the Stocks on the Move screen. If they meet my criteria then what I do is add them to my watch list.

This gives me  a list of stocks that I can check instantly and in a glance I can sort it by price percentage change. Those stocks up in price and also up in volume are stock in uptrends that I should focus on. However, I must do further research and see if it is at a proper buy point. Stocks that have been moving upward for a while may be tiring out and their run might be exhausted if you blindly buy a stock on a day when it appears on the list. This is the value of watching your screens daily. You can see and remember if they have been on their for awhile.

A current watch list will help you learn how to find stocks in an uptrend quickly.




In general though you want to spend your time looking at stocks that are increasing in price and have an RS line that is trending higher. By focusing on these stocks, you increase your chances of finding a stock that has institutional support - a key factor in a winning stock.

If you are short on time, another screen you might want to review each day is the IBD Timesaver table. This screen lists stocks that are up in price and that might deserve a new look. I know that Stockbee reported the other day that Dan Zanger watches a list like this to find stocks as well. Anyway, that's a quick tip for you that will hopefully answer your stock market investing question.

Distribution Day Stock

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One of the first things you want to learn how to spot is a distribution day in the stock market. The first place you want to look for distribution is in the general market indexes. A distribution day is when sellers outnumber buyers. You can tell when it happens when an index closes lower on higher volume than the previous day. While a distribution day is not ideal, one in and of itself is not a big deal as the market does need time to rest from time to time. But, stack 3 to 5 days on top of each other and then it puts pressure on the market uptrend. This is when you'll want to start looking for a correction.





In the chart at the right, you can see that the stock closed significantly lower the other day on higher volume. This is what distribution looks like. Sellers outnumber buyers and when that happens the price falls. Sometimes this selling comes out of the blue and this one caught me unaware because of a surprise earnings announcement from another stock in the sector. But if I'd been paying closer attention, I would have spotted distribution a few days before. You can learn more in my post called What Is A Distribution Day.

This is the kind of thing that you'll learn to spot as you gain more experience. And, while in general I might have spotted it sooner, I learned the lesson a lot better because I had established a position in the stock and the loss smarts, simulated or not.

This is also a reason that I think that everyone would benefit from practicing in my Buying Stocks - A Case Study challenge. You'll learn to spot this more when it happens to a stock that you are actively following.

I know that I did. I hope that chart helps you spot distribution in a stock. Good luck on your stock market investing program.

Stock Market Today

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The stock market today maintained it's uptrend with gains on all four major indexes all on higher volume. While the S&P 500, the Dow and the NYSE Composite all rose on higher volume that volume was lower than the 50 day average volume. The NASDAQ meanwhile rose on volume that was higher than the 50 day average volume. It was good to see the strength on that index. The news today was about the Federal Reserve easing monetary policy. I'm not exactly sure but if the Fed prints money that makes the dollar worth less. If the dollar is worth less, it might push the indexes higher just to maintain it's true value. I think that this is a good sign for the overall increase in the market indexes.

A day like today is easy to see exactly what happened because all indexes were up, and so was volume. Since the market is in a confirmed uptrend, I'm watching for distribution days that indicate institutional selling. I didn't buy any stocks today because yesterdays increase in the indexes was on low volume because of the holiday.

The NASDAQ was one of the stronger indexes in terms of volume in the stocks market today.





The first thing that I do everyday is check the market indexes. This is also the first information available from IBD. The charts of indexes are on the homepage on a 20 minute delay. Next comes the Big Picture column and then the IBD TV Market Wrap. Later in the day the actual paper is published and I take a look at the How's the Market page.

Because the market is still in an uptrend, it's still a good time to look for stocks. Keep an eye on your stock screens for opportunities that might emerge.

All in all, it was great to see the market go up. Keep an eye on the market each day. It can quickly turn.

Monday, October 11, 2010

Is The Stock Market Open On Columbus Day?

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My friend I were hanging out this weekend and then he wondered is the stock market open on Columbus Day? The answer is yes. The holidays that it is closed are New Year's Day, Martin Luther King Day, Washington's Birthday/President's Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas. This is where I found the current calendar for the NYSE. Market hours are from 9:30am - 4:00 pm daily.

While the market is open, even if it wasn't it's still a good time to further your stock market investing knowledge. I do this by re-reading How To Make Money in Stocks and by reading back issues of the Investor's Business Daily. Another good thing to do would be to watch the Daily Stock Analysis videos on IBD TV.


The other thing I like to do is to clean up my watch list and take the time to look for stocks approaching buy points. A good way to work on your skills is to read the IBD 100 and Weekly Review and look closely at the mini charts. A lot of times these charts have buy points listed. Reading these notes can help you figure out how to recognze bases as well as get better at finding pivot points.

I also take a look at my positions to look for signs of selling. This can come in a number of ways. One would be if the market turns into a correction. It could also show in the form of my stocks closing lower on higher volume (distribution) or closing higher on lower volume (stalling action). Start getting in the habit of looking at as many charts as you can. Charts are to you what an X-ray is to doctor. Use them to see how healthy your stocks are.

Another thing I think that's helpful to do is to review your investing checklists. Work to constantly fine tune them.

Well, since today's not a holiday, it's time to get moving.

Thursday, October 7, 2010

How To Buy Stock

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This site is about learning how to buy stock. I've been a big believer that you can probably learn how to invest your money better than your broker. This is because your broker usually only tells you when to buy and never when to sell. Owning a stock forever and not selling it for a gain is probably the biggest myth of the stock market. Buy and hold. You've heard the advice before. This advice works great for mutual funds because the fund manager is actually buying AND selling the stocks. They aren't holding them forever. You shouldn't either.

That being said, perfecting the art of buying stocks is easier said than done. You will have to study the market daily. You'll have to set up a system that fits your personality and that eliminates the emotion of investing. But not only that, you'll need to set up a way to learn from your mistakes. Learning by doing is the only way. You can't sit on the sidelines.

Step one is to pick a strategy and stick to it. Make it your sole focus. You can't make money practicing 18 different techniques at once. You'll never master them all. Pick one that's proven to make money and get to work. That's why here, I only talk about CANSLIM for the time being because I am trying to master one specific proven strategy. This is key. There is no reason to recreate the wheel. Whether you pick CANSLIM or value investing or penny stocks or options it doesn't really matter. Just set out to master whatever strategy you choose.

Once you have done that, you've got to practice. You do this by using a simulator. This is what I've been building my series of articles around over the past several weeks. You can see the beginning here at this link: Buying Stocks - A Case Study. If you want to see my last four articles in the series here are the links.

Stocks To Buy Today
Best Stocks To Buy
Stocks To Buy
Good Stocks To Buy

In the processing of learning how to buy stock, you'll take some lumps on the way. Notice my red losses. This is what happens when you buy stocks extended to far from a proper buy point.




Before I learn how to buy stock online, I spend time in the gym so to speak. All the professionals do. From scrimmages in professional sports to airline pilots, all learn from practicing. And while real world experience is the best teacher, we live in a world where we can recreate real world conditions. This will save you money when learning how to buy stock. You can start by practicing. You can see what kind of mistakes that you will make. Then you'll repeat the learning process by using real cash. Because this again will require a learning curve as well, because let's face it, the practice field is not the real thing.

So what I would do is spend time setting up your daily stock market investing routine. For me, that means that I first check out the days market action. My rules say that I will only invest when the market is in a confirmed uptrend. The market is still in a confirmed uptrend so that's good.

The stocks I've been looking at make me feel like we are in a correction. But the market itself doesn't show that right now.

Next, I check out my stock market screens and today decided to add three stocks to my watch list. They were:

EMV, FFIV, FOSL

Well I guess that I only really added EMV as the other two were already on my list.

I've been suggesting that you build your watch list from one screen until you get the habit down. The IBD has so much information in it. After awhile, you'll expand it. Lately, I've been looking at the other screens. In particular, the Weekly Review and the Stocks in the News. Mainly because they have the mini charts. I also take note of the stocks mentioned in the Big Picture column. Many of these stocks will probably be stocks that you will probably have on your watch list.

Anyway, after that, I take a look at the stocks on my watch list and prune the list of stocks. For example today, I removed a stock that I'd taken a position in ARUN because it's Acc/Dist Rating was now a D. I also have to sell that stock as well.

My problem in unloading some of the stocks I've purchased is that the investopedia simulator has been down all week. I also sold FFIV. I've been using Wall Street Survivor as a back up and was able to unload it. I expected it to rebound today. It did by a few percent but not by a whole lot.

Today, I picked up PPO.

I've got a little added pressure to because a friend of mine decided to pick it up with real cash. We'll see how it does and he'll tell me if I really know how to buy stock. He already decided that you all should short the stock...lol.

Good luck!

Stock Market Today

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I wanted to give my report on the stock market today. As is my customary routine, I like to check out the market action on the four major indexes to see the price and volume action for the day. As a reminder, I have a little routine that I do after the market closes. It takes a couple of hours to get all my data but here is what I do.

The first thing that I do is go to investors.com and check out the four major indexes. Those are the S&P 500, the Dow, the NYSE and the NASDAQ. This information is free by the way and you don't need to be a subscriber. The first three indexes price action for the day are all compared to the volume on the NYSE. The charts here show that without me having to look at a different chart. It's a small step but it saves a me having to remember it. The other thing is that the NYSE volume figures for the day are different than from other news outlets. Today for example volume on the NYSE according to IBD is 873 million shares but according to other outlets it was around 4 billion. This is because the 4 billion shares traded include all of the regional exchanges as well. Why the difference? Your guess is as good as mine, but I am guessing it's because this then puts greater weight on what the institutions volume is as a percentage of total volume. Otherwise, I'm not sure. But because the editors determine market direction from this figure I like to be consistent as well. FYI: NASDAQ volume for the day is pretty close to other news outlets but not exact.

The NASDAQ closed slightly higher today on lower volume. While not a distribution day, you'd rather see the index close higher on higher volume.




The market indexes were mixed today. The NASDAQ was up in lower volume and the other three indexes were lower in lower volume. This means that all four indexes dodged a distribution day today. The market remains in a confirmed uptrend with the NYSE standing with the most pressure at 3 distribution days.

It's important when you look at the market indexes to ask yourself, what happened? Determine for yourself exactly what kind of day it was. With the market in a confirmed uptrend, the question you want to ask is was it a distribution day. It wasn't which is good. What you hope to see is the market closing higher on higher volume.

Once you have figured out what you think happened, watch the IBD TV Market Wrap. This daily video is an awesome resource to help you spot what to look for. It will help confirm what you thought. If you were wrong make a note of today's action and remember that next time you see similar price and volume action, you'll know how to spot it.

I then swing over to read the Big Picture column. This column, along with the video is usually available before the actual paper. Read it to garner additional information like what the paper thinks are the current leaders in the market are. Make sure to consider them for your watch list.

According to what I heard, the market is awaiting the jobs report tomorrow and we've started entering some earnings results period as well. This could have an impact on the your stock market investing depending on what happens.

Wednesday, October 6, 2010

Good Stocks To Buy

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Today is a tough day to look for good stocks to buy but as usual we are going to give it our best shot. As I continue my series on Buying Stocks - A Case Study, my first order of business is to take a look at the general market indexes and see if there is any change in the general market direction. Surprisingly, there was no distribution on any of the in major indexes. I say surprisingly because most of my stocks got hit pretty hard today. One specifically FFIV which I just purchased today dropped double digits. As is my current practice, I am only trading after hours and making all of my decisions after the market closes, I will put in a sell order to be executed at the market open. That's what happens though when you buy a stock that is extended to high from its buy point.

Anyway, if you are just joining me before I go on, I should catch you up buy giving you a few links to some of the previous four posts before I move on. You can find them by using these links.

Stocks To Buy
Best Stock To Buy Today
Stocks To Buy Today
Best Stocks To Buy

The one bright spot today is MSB. In that position, I'm up over 18%. Without much experience in how the market will react tomorrow, I'm thinking it will rebound somewhat consider the market as a whole volume was much lighter than the previous day. So, we'll see.

In checking my screens, it's probably no surprise that not many stocks showed heavy volume then, especially since it's more tech heavy. Most stocks then came from the NYSE side of the table. The stocks that met my screens today were:

PPO, MSB and TPCG

Yesterday, I could have selected TPCG (up 5.44%) instead of FFIV (down 12.52%) so made an error there. However, it shows me my selection criteria are finding some good opportunities. It's the end user that needs to work on his picks.

Finding good stocks to buy is part fundamental and part technical. Finding the best buy point is the key factor.




I didn't really see much that I really liked but finally decided on PPO. It looks as if it broke out of a three weeks tight base on volume 50%+ higher than yesterday. While I'm still honing my chart reading skills to see which shares to buy today, I've put a chart here so you can see the breakout. (The volume on this chart is weekly but on a daily chart you'd see the slight surge in volume.) For me as far as good stocks to buy right now goes, it met my criteria and was close to a buy point as I could determine. The thing about chart reading is that you have to start by practicing and learning from your mistakes. That's what I'm doing here.

I've been learning a few things here that justifies going through the process of practicing 100 trades before I invest real cash. First and foremost is that the market is pretty unpredictable. I'll be watching my stocks carefully as several lost ground on higher volume. I'd tell you exactly but investopedia is still down. Pretty bad for a pretty good simulator. I guess that's what I get for that huge subscription I have been paying lol. Anyway, good luck finding good stocks to buy now and keep me posted on your stock market investing progress.

5 Stocks To Buy Right Now

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Today, I wanted to give you my screens 5 stocks to buy right now results. This doesn't mean that they will indeed go up. These are just the five stocks that made my list today.

FFIV
TPCG
EBIX
SMTC
ZBRA

I found these stocks while trying to figure out which shares to buy today by reading Investors Business Daily's Stocks On The Move screen. After they show up there, I screen them for a few more characteristics to eliminate the stocks I want to review to a smaller number. This is what the game is all about, looking at the market, then looking at a smaller portion of it. Let your criteria for stocks be your guide and don't get frustrated if you see another stock go higher without it showing up on your screens. There are plenty of stocks to choose from - particularly in a market uptrend.

I've already established positions in ZBRA which I subsequently sold for a small loss and have 3 positions in EBIX which I continue to like. The stock I bought today was FFIV. F5 Networks. I like it's price performance so far and it seems to be under accumulation. I don't like the fact that it appears to be extended from a proper buy point. A better strategy would be to let it consolidate some of it's gains and let it establish a proper buy point.

From an investors point of view, waiting on a stock to consolidate is a tough thing to do sometime. I'm entering this stock knowing that it might not go higher and start forming a new base. One of the things that I will have to exercise after going through this case study is patience and waiting for the stock to perform a certain way first -- then buy.

For today though, I am consider it one of my best stocks to buy. Good luck on your stock market investing program.

Tuesday, October 5, 2010

Learn The Best Stocks To Buy

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In my search for the best stocks to buy, I took a few days break to take care of every day life, you know, working and stuff. I'm back today and thought that I would do sort of a recap of my Buying Stocks - A Case Study and see exactly what I've learned so far. As usual, when starting my daily routine, the first thing I do is look at the stock market today and see what happened. I know lately, I've been getting the feeling that the market might have been turning a bit. It's easy to let your emotion help dictate the decisions that you make. You want to get in the habit of making the same stock market investing decisions regardless of your feelings. William O'Neil teaches this in his book How To Make Money in Stocks. Let the market tell you what to do.

Today, the market indexes all were up on higher volume. The IBD Market pulse still shows that the market is in a confirmed uptrend. While the NASDAQ has shown some distribution, the other indexes haven't suffered as much. I've been using a second indicator of how strong the market is and that's the number of stocks that show up on the Stocks on the Move screen. Today, the NYSE extended the whole list.

If you have read my previous posts, you'll know that I use this screen to build my watch list and have been looking for the best stocks to buy right now from this particular screen. Here are links to the last four posts in my series:

Buy Stocks Online
Stocks To Buy
Best Stock To Buy Today
Stocks To Buy Today

I am a big believer in keeping it simple and in keeping it easy. One way to do that is to reduce the amount of stuff I have to look at on a daily basis. If you have read the IBD, you'll know that the ideas for potential stocks to buy are basically on every page. I've decided that personally, I don't want to look at all of it, only a section. It's my opinion that any stock worth buying will appear on this screen.

Each day, I check this stock screen and select the stocks in bold. These are stocks with EPS and RS ratings of 80 or greater. Next, I put these symbols into My Stocks List. You can have up to five lists. The first one I've dubbed Research. I put the stocks symbols I find today into it and start reducing the number of stocks by some additional criteria.

I start by looking at today's price and volume, I sort it by percentage price change to see what was the strongest stock of the day. I then sort by volume and eliminate those stocks that don't have at least 100,000 in shares traded for the day.

After that, I then look at the Smart Select ratings and sort each column individually from highest to lowest. I eliminate all stocks that don't have 80 or greater ratings and any stocks rated B- or less. This usually knocks out a few more stocks off the list. If there is an N/A, I leave it on the list. Rightly or wrongly, that is what I decided to do in that case.

The next thing I do is look at the Fundamentals and eliminate all stocks that have less than 25% in any column. This eliminates a few more stocks.

Finally, I check each chart and based on some advice from Stockbee, I only focus on stocks that have less than 100 million in float.

This leaves me with a list of what might be the best stocks to buy now.

Today's screen left with me with the following stocks.

FFIV, TPCG, EBIX, SMTC, ZBRA, ARUN, FOSL, CXO

Once I have these I add them to my current watch list. To this point, I've put together the following watch list.

JKS, OPEN, RVBD, MSB, TGH, EBIX, ZBRA, PCLN, NDSN, ARUN, NFLX, HMIN, IIVI, HSFT, FFIV, CXO, TPCG, SMTC, FOSL

I also do a couple of things when I add new stocks to my watch list. The first thing I do is take a look at how the list as a whole performed today. Today, all of the stocks except for three were up from 1 to 5%. This tells me that I am on the right track that I am at least picking stocks that are going higher. Part of this probably has to do with the market trend. Remember that three out of four stocks follow it.

The second thing I do, is prune the list by sorting the stocks using the criteria above and eliminating those which don't fit my minimum thresholds. Today, I got rid of a few. You need a strategy for pruning your lists and this is mine.

OK. So now I have the best stocks to buy today, or at least the ones I've decided are. The next thing that I have started doing is looking at each stocks chart. If you use investors.com, you'll see that when you pull up a stock's chart, that it defaults to the daily view. I noticed that in his book, O'Neil uses weekly charts to find patterns like the cup with handle and the double bottom. Identifying these patterns will take some time and is one of the reasons that I recommend practicing daily to gain the experience that you need.






Finding the best stocks to buy also requires that you buy them at the best time.

While I can't claim expert status at reading charts, I feel pretty good that one of the patterns that I think I recognized was a double bottom with handle in EBIX. I was pretty confident that this was a breakout and IBD has recently confirmed it for me. As I recognized it, I actually bought three positions in EBIX of the ten that I've established so far.

I think that this is the hardest part of CANSLIM, identifying specific buy points. I suggest the following tips for beginning. Tip number one is to look at the weekly chart like I said above. Next, look for smooth charts and avoid the choppy ones and ones that have big gaps. After that, look for lots of accumulation in the last few weeks and steer clear of the ones that don't have it. Also, look back at previous highs and see how close the stock is to this level. A breakthrough on heavy volume through this point my be your buy point. Another thing I have been doing is looking for stocks that haven't extended to high although I have broken that rule a little bit particularly with OPEN.

Here are the stocks that I've picked up so far in my stock simulator.

EBIX up 4.21 percent today. I have three positions in EBIX and it's been paying off.

ZBRA up 3.82 percent today. I sold this position for a slight loss and moved it into EBIX because it wasn't moving. I liked the chart of EBIX.

ARUN up 3.78 percent today.

MSB up 3.34 percent today.

JKS up 3.33 percent today.

HMIN up 2.76 percent today.

NFLX down .15 percent today.

OPEN down .91 percent today.

I'd give you the exact gains or losses since I picked them up but Investopedia.com but as has been a disappointing problem with that site is that it's down quite a bit. I do know that a couple of my positions are up double digits and don't think that any are down. I am in search of a better simulator.

The other thing I want to do is pay closer attention to the charts that I own looking for signs of weakness. I did do that with ZBRA and didn't see any real accumulation going on there like in EBIX and that's why I moved that position.

Once I get done with my 100 practice stocks, it's time to move onto real cash. I've opened an account with TD Ameritrade for that purpose. Good luck in finding your best stocks to buy and keep me posted on your progress.

Monday, September 20, 2010

Buy Stocks Online: Start Looking At Charts

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When you first start to buy stocks online, I've suggested that you spend a lot of time practicing first and I've defined that time period as 100 simulated trades. If you have been following along here as we buy stock online, you'll note that we've bought 3 stocks. They are JKS, MSB and OPEN. All three of those stocks were up today. The market really hasn't suffered much distribution and today it even cleared out one distribution day on the NASDAQ because of the distance the rally has increased the price of that index.

Today, the market returned a bunch of stocks on the Stocks on the Move screen. Here are the stocks I had to look at today.
mvo

vit

rax

ppd

pvh

msb

svr

dsw

hs

tgh

thi

teo

pay

aap

cpo

vsi

clf

hdb

tpcg

rovi

ebix

otex

sina

ntct

igte

zoll

trmb

mwiv

zbra

wrld

hmsy

bidu

asps

pcln

infa

ndsn

wynn

arlp

disca

aapl

hsni

gmcr

neog


After seeing relatively few stocks on the screen for so long, it appears that the market is strengthening based on this list. Applying my screens to these stocks returned the following candidates for buying stocks online through our simulator.


They were:


MSB TGH EBIX ZBRA PCLN NDSN

If you buy stocks online ZBRA might deserve a look.




Of these stocks, I purchased $1,000 in ZBRA. We'll see how it does.


In learning how to buy stocks online, I've started to turn my attention to analyzing charts in greater detail. The first thing I am going to tackle is the cup with handle pattern.


The first thing I noticed from O'Neil's book is that he uses weekly charts to identify his chart patterns. So starting with the six stocks today, I began taking a closer look at the price and volume action and specifically looking for the cup with handle.


The goal here is to identify the correct buy point, also known as a pivot point. He spends a lot of time talking about buying stocks at the right time. Mastering this particular component is probably going to be the toughest.


For now, what I recommend is get in the habit of looking at the charts. See if you can spot bases. As we go along, I'll try and lay out my strategy for figuring that part out.


Until then, good luck with your stock market investing program. If you want to follow along with my progress here, I suggest that your read, "Buying Stocks - A Case Study". Here are a few other posts that go through what I'm doing.

Buy Stocks: Where I Started
Buy Stock: Follow The Leaders
How To Buy Stocks
Stocks To Buy Today
Finding CANSLIM Stocks To Buy

Sunday, September 19, 2010

Finding CANSLIM Stocks To Buy

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This site is all about finding CANSLIM stocks to buy. As I mentioned in an earlier video, there is no reason to reinvent the wheel. When you are new, do what the masters teach you. Master what they teach first and then fine tune it based on your experience. The Investor's Business Daily is one big CANSLIM stock screener that bring stocks you might want to buy to your attention. Use them. They usually have some of the best stocks to buy right now in them.

Let's see what is available each day.

Stocks On The Move


The stocks on the move screen highlights stocks that make price moves on higher volume. This is a sign of institutional sponsorship - a key component of a stock's ability to go up significantly and the "I" in CANSLIM.

Stocks In The News


The stocks in the news screen highlights stocks that are close to potential buy points. When you are learning how to buy stocks, the hardest part is identifying the pivot point - or the ideal entry point. These stocks are close to buy points and there is a chart for each stock that also sometimes gives you the pivot point so you can learn how to find it. The mini charts are a great resource especially if you don't have a subscription to the Daily Graphs feature of IBD.

New Highs


Stocks making new 52 week highs can also contain some of the best stocks to buy. Stocks that skyrocket in price have to make new highs many times. Keep an eye on this list for potential winning stocks.

Timesaver Table


This screen highlights stocks that make big price increases and is worth a look. Personally, I prefer the stocks on the move screen as it's a little easier to cherry pick the bold stocks. O'Neil devised it for it's ability to save you time. If you only have a limited time, refer to this screen.

On investors.com you can also find some good stocks to buy that meet CANSLIM criteria. There's the screen of the day for one. Also don't forget that stocks mentioned in the Big Picture column or on the front page are also great CANSLIM stocks. Because of that, you might want to add them to your watch list as well. Other popular screens are the IBD 100, the Weekly Review, the IBD 200 and the Big Cap 20.

In the end though, the best part of the Investor's Business Daily is the number of ideas it generates. This can cause information overload. That's why I suggest that when you are putting together your stock market investing routine, that you focus on one screen only. It makes your job that much easier and if you are a beginner that's a big deal.

Right now, I am tracking my progress. It's called Buying Stocks - A Case Study. If you want to follow along here are some previous posts you might have missed.

Buy Stocks: Where I Started
Buy Stock: Follow The Leaders
How To Buy Stocks
Stocks To Buy Today

Saturday, September 18, 2010

Best Stock To Buy Today

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According to my stock research, the best stock to buy today is Mesabi Trust (NYSE: MSB). It broke  out on Friday. It was up 2.36% in price and on volume 70.83% higher than average. It's this kind of breakout that shows it's potentially being bought by the "big money". It's also sporting an IBD Composite rating of 99, EPS rating of 85, RS rating of 99, SMR rating and Group RS rating of A and Accumulation and Distribution Rating of B+. Fundamentally, company earnings per share were up 4100% in the last quarter. This kind of growth in earnings is what you want to see in a growth stock.

The best stock to buy today might be Mesabi Trust in the Mining Industry"





Just because it's one of the best stocks to buy today doesn't necessarily mean that it will go up in value. Always make sure that you first do your own due diligence and cut any losses at 8% of your purchase price.

There weren't many stocks to like today, but of the ones I focused on, this was the one I liked the best.

Especially, since I get emails that keep touting the best penny stocks to buy today, I know that this stock probably will garner more institutional support.

There are some negatives though. It might be slightly extended in price. When that's the case, it's easy to get stopped out of your positions.

As you get more proficient in chart reading, you'll discover that you will learn to fine tune your entry and exit points.

Make sure that you at least put this stock on your watch list for further review. Whether it's one of the stocks to buy today from your point of view, you'll have to see how it stacks up to your stock market investing criteria. For more information on how I choose stocks, check out my series called "Buying Stocks - A Case Study"

Stocks To Buy Today

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Your search for stocks to buy today should start by looking for stocks that close higher on higher volume or what is referred to as a breakout. I personally look for stocks that breakout on a 2% percent price increase on volume 100% higher than the average volume. Why do you want to focus on stocks breaking out? That's because the best stocks to buy today are the ones that have institutional sponsorship. It's this sponsorship that drives prices higher. You are looking to ride that wave along with them.

The hard part is finding stocks that institutions are buying because they don't disclose it to the mainstream media. In fact, the exact opposite probably happens. When the media tells you to buy a stock, that is probably when they are getting out. Once this "advertising" starts to take place, it's purpose is to find buyers for the shares they are selling.

So, if they don't broadcast to the world what they are doing, then how do you know what stocks to buy today that they are buying. The answer lies in the breakout. Stocks that experience unusual volume and the price rises at the same time are under accumulation by the big money. Follow the money and you'll have a chance to make money on their coat tails.

You can find the best stocks to buy today that potentially have institutional sponsorship by watching the "Stocks on the Move" screen published daily in the IBD. Just about every stock that goes higher will show up on this screen. Watch it daily and add some of these stocks to your watch list and monitor it for breakouts.

This is where I start my search for good stocks to buy today and you should too.

Open Table, Inc. turned out to be one of the best stocks to buy today when it's breakout occurred.





Let's have a look at what can happen. Earlier this year, Open Table, Inc. broke out on huge volume and a large price increase. You can see what's happened since.

This stock has risen considerably since then. The reason behind the move is big money is behind it. Once the big money decides to get it, it has this kind of effect.

Will this always happen? No. That's why you've got to do additional research. Many breakouts will fail. Your goal is to find the ones that succeed.

You do that by watching stocks making big moves on huge volume increases, adding them to your watch list.

Eventually, you buy some of them. With experience you can find some hot stocks to buy today.

Good luck with your stock market investing. For more information check out my "Buying Stocks - A Case Study" series.

Links to the posts directly after that one:

Buy Stocks: Where I Started
Buy Stock: Follow The Leaders
How To Buy Stocks

Friday, September 17, 2010

How To Buy Stocks

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Since it's Friday, I thought I would spend a little extra time talking about how to buy stocks. Weekends are a good time to reflect on the market, your trades and cleaning up or adding to your watch list. Learning how to buy stock is something anyone can do. But, the fact is that most never take the time to study the market long enough to gain the experience they need to succeed. If you think the media is going to tell you the best stocks to buy, you are going down a quick road to failure. The key to buying stocks is watching the market and identifying the leading stocks on a daily basis. Actual trading experience is also the best teacher.

Over the history of the market, many people have put in countless hours of study and developed investment strategies that are proven successful. Because of that, you don't need to reinvent the wheel. Pick a strategy that suits your personality and run with it. Learn it inside and out. Don't go from idea to idea looking for the next get rich quick investing idea. People get sucked in to options, forex and penny stocks all of the time. Can you make money using those vehicles. Absolutely. Is it likely? No. Stick to strategies that are proven from the masters of investing like Peter Lynch, Benjamin Graham, Warren Buffett and William O'Neil. Start studying their works and putting in place your own set of steps to take on a daily basis. That's what I am doing here. I've become a follower of O'Neil and his CANLSIM strategy. I've decided it's the only strategy I am going to follow. I've also decide that I'm going to set out to master it as best I can.

I've started to illustrate this process with a series of articles in my Buying Stocks - A Case Study. To get up to date on what I am doing, you might check out the most recent posts in this case study by checking out these articles.

Buy Stocks: Where I Started
Buy Stock: Follow The Leaders

How To Buy Stocks For Beginners


First, I recommend that you become a CANSLIM investor. Start by reading How to Make Money in Stocks by William O'Neil. He also has another book called The Successful Investor that I think actually breaks down the steps in a more clear fashion. Read and re-read these books. Next subscribe to the Investor's Business Daily. Also known as the IBD, this paper is the source for all of the data you need to be successful. As a subscriber, you'll also get access to investors.com which has several useful tools to help you succeed. This includes a very thorough help section. I've also called IBD many times asking questions and they have always been extremely helpful.

Next start studying, the market indexes on a daily basis. Commit to only investing when the market is in a confirmed uptrend. The Big Picture column tells you every day what the current outlook is. You don't even need to know how they figure that out. Today it's in a confirmed uptrend. That's really all you need to know. Can you develop your own system to determine market direction? Should you add all of these secondary indicators that detail market breadth or new highs to new lows? Well maybe, but as a beginner, don't worry about such complexities. Keep it simple.

When you look at the stock market each day, what you are really looking at are the market indexes. Indexes are a composite (or price average basically) of how the stocks in that group performed for the day. You want to focus on four indexes. They are:

  1. S&P 500

  2. Dow Jones Industrial Average

  3. NASDAQ

  4. New York Stock Exchange Composite

Finding this data is easy. You just go to investors.com and look at the home page. They are right at the top. They are also at the top of the front page of each days paper.

I like to look at it online because I can quickly look at the indexes chart by clicking the link. While the same data is available in the paper on the How's The Market page, I like to see it on my computer screen.

Each day, look at index and determine if the market index went up or down in price. Once you've done that, look at the volume for the day. The volume is the bar at the bottom of the chart. Was the volume higher or lower than the previous day?

Once you've identified these two pieces of information, you can tell what kind of day it was on the market. These are the four things that can happen on an index each day.

  1. The market could close higher on higher volume. This indicates that the market is under accumulation and money is flowing into the market. If the market is in a confirmed uptrend, this is what you want to see and is a positive for the market. If the market is in a correction, this could be considered an attempted rally or also might be a follow-through day. If the market is under pressure, this is also a good thing. In any case, this action on an index is always a great thing for investors.

  2. The market could close lower on higher volume. This indicates that the market is under distribution and money is flowing out of the market. If the market is in a confirmed uptrend, depending on the price decline (more than .2 percent) it will count as a distribution day. If the market index is in a correction, this just means more of a bad thing.

  3. The market could close lower on lower volume. This is the kind of action you want to see on an index if it has to have a decline. It's neutral action in any outlook at the time.

  4. The market could close higher on lower volume. This is more a stalling action that might indicate the big money has stopped putting money in the market and is more of a sign of weakness or stalling action. While not necessarily a bad thing as every market uptrend needs to rest somewhat, it might be a red flag if it continues.

So to summarize, first look at the current outlook. You are going to find one of three conditions:

  1. Market in confirmed uptrend (time to invest)

  2. Market uptrend under pressure (don't invest, consider selling)

  3. Market in correction (sell your positions)

Figure out what kind of market you are in.

Next, identify what happened on each index for that specific day. Is the market under accumulation or distribution. Read the Big Picture column, watch the IBD TV market wrap but only after you have decided for yourself what happened. Then confirm it by using those tools.

Remember this rule, only invest when the market is in a confirmed uptrend. Keep it simple and in the beginning just go with what they say. Get fancy later.

It will be around this time that you'll get an email or see an ad that will say "How To Buy Penny Stocks" promising riches and quickly. There's nothing to see there. Move on and keep your focus on your strategy.

The first step in learning how to buy stocks is only investing when the market is in an uptrend.





The next thing you want to do is start identifying stocks that meet your criteria. As a CANSLIM investor, there are several screens you can choose from that will bring some of the best stocks to buy to your attention. If you focus on buying the leaders, you'll dramatically improve your results. The problem with the IBD is that their are so many ways to locate good stocks to buy that you'll probably feel overwhelmed.

You'll find:

  • The IBD 100

  • Your Weekly Review

  • Stocks on the Move

  • Stocks in the News

  • IBD 200

  • Timesaver Table

  • New Highs

  • New America

  • Big Cap 20

Because there are so many screens, it's almost too much information. So, here is my suggestion. Pick one screen to build your watch list from. Maybe you will like the IBD 200. Maybe it will be the Weekly Review. It really doesn't matter. Pick one screen and keep it as your source of new ideas. I guess in an ideal world, you'd have the time to make note of all the stocks in each of the screens. But in the world I live in, I only have so much time.

I repeat, when you are just starting out, pick one screen and only focus on it. Keep it simple.

For me, I chose the Stocks on the Move screen. Almost every stock that goes on to make huge gains will show up on this list, probably more than once. I watch it daily and then add the best stocks to my watch list. These are stocks I might want to buy at some point. But I don't know yet. I have to check further.

Here's how I do it.

  1. I review the Stocks on the Move list.

  2. I write down the tickers for the stocks in bold. These are stocks that have an EPS rating and an RS rating of 80 or higher. EPS stands for Earnings Per Share and RS stands for relative strength. The higher the number the better quality the stock. Keep in mind though that stocks that have high ratings might not go up. Why? They might have already peaked. That's why you'll need to review them further.

  3. Once I've done that I put the ticker symbols into a MyStocksList on investors.com. I look at the price and volume information. I eliminate all stocks that didn't have at least 100,000 in daily volume.

  4. Next I look at the Smart Select Ratings. I eliminate all stocks that have a Composite Rating (IBD's special rating) of less than 80.

  5. I eliminate all stocks that don't have A or B ratings for SMR, Acc/Dis and Group RS ratings. I don't include anything of B- or less.

  6. After that, I look at the fundamentals. I eliminate all stocks that don't show increases of at least 25% in EPS and Sales changes across all of those options in my stocks list. I keep N/A stocks.

  7. Finally, I check the remaining stocks and eliminate stocks with more than 100 million in float.

I then add these stocks to my watch list and will review them further.

Now before you move on to learn how to buy stocks online, I suggest that first, if you are new, that you go through an three to nine month practice session. I'm going to suggest that you simulate 100 trades before you invest your own money.

That's what I am doing right now to show you how it should be done. The correct way to practice is to go through the motions just like you would if you were using real money. This will help you get a handle on your daily stock market routine. Start to make checklist of each and every action that you take. Start streamlining your routine so that you do the same thing every day. Get it out of your head and put your checklist out where you can see them. Take the time to go through them each time. Eventually you learn them by heart. But at first, you'll discover some little step you forgot here or there. You'll decide you need to add this or subtract that step. In essence, you'll be refining your steps. When you get everything out of your head, eventually you won't think about the steps any more and you'll be able to focus on the big picture, help control your emotions when you finally invest real money and be more able to act on your experience than figure out if you are doing everything you need to do.

Many people at this step of how to buy and sell stocks will scoff at using a simulator to practice. They will tell you that it's not like the real thing. They will say that the simulator won't act like the real market and you won't act the same once you invest real money. And, they will be right. But professionals every day use simulators to make sure they are well suited to the task at hand. Pilots, use simulators and checklists to be sure that they can handle any situation they might encounter. You should too.

I suggest that when you start identifying stocks that show up on your screen, you do a simulated buy the next day of a $1,000 worth of the stock with the least amount of float. Float is the number of shares that actually trade. The lower the float, the more of a pronounced impact on the price when the big institutional money flows into it. This kind of action is what you are looking for.

You want to ride this kind of uptrend as high as it goes. But when you do these simulated buys, what you should be doing is also setting your stop losses and your profit target. Whatever the price of the stock is, multiply it buy .92 to get your stop price. This is an 8 percent decline and also multiply it by 1.20 and this will give you your price target.

Once you've simulated the buy, only trade at the beginning and end of the day. Don't make intraday decisions. You'll find that some of your stocks will decrease quickly or increase quickly because of the low float. They will be more volatile. For now though, only check your stuff at the end of the trading day. If it dropped 8% or more, sell it at the beginning of the next day. If it increases to 20% sell it the next day.

Your goal here is to do this daily until you know not only what steps you need to take but also how to buy stocks and sell stocks as well. You won't be holding them forever. Some stocks will go down immediately and you'll cash out and leave. Some you'll be in for a while. If the market turns into a correction, you'll exit all of your stocks. If the market uptrend comes under pressure, you'll not buy any new stocks. Do just like you would if it were real money. Start studying charts and looking for cup with handle patterns, flat bases and other patterns. Try and identify ideal buy points. Start watching the price and volume action and ask yourself if money is flowing into this stock or not. See the market index information above. It's the same for individual stocks. Keep an eye on three moving averages, the 10 day, the 50 day and the 200 day moving averages.

Do this for 100 simulated trades as quickly as you can but no more than one a day. Along the way keep a trade journal of each stock. Note the results. What was the percentage gain or loss. Your objective is to be right on 1 out of 3 of your "at bats" basically. Also, make note of why you sold the stock. Was it because the market turned. Maybe the stock didn't seem to act right. Was it because it closed lower on extremely high volume.

Be tight with your simulated money. Treat it like the real thing and make sure that you contain your losses.

If you were right one out of three times, you have graduated to the next version of simulation. You'll want to open a trading account with $1,000 bucks and treat it just like a simulator. Only this simulator is a real live trading account with real time data. Start repeating the process. Choose a broker that's as reliable as you can get with the lowest commission possible. You want your in and out fees, or roundtrip, to be as low as possible. For example, if you go with Scottrade at this time, their fees are $7 per trade. Your roundtrip will be $14.

Now though, you'll only want to own one stock at a time. You'll learn quickly that the real market does work differently. And so do your emotions. But keep in mind that to learn how to buy stocks without a broker is a learning process. One you can do if you put your mind to it and focus your study. As with your simulated trading, buying stocks for real, you'll have the same goals. At least one out of three. Once you've done that, start committing more money to your stock market investing. Well, I've talked a long time today.

Today, I didn't add any stocks to my watch list. I put a buy order in my simulator for NYSE:MSB Mesabi Trust.