Tuesday, September 14, 2010

How Do You Know If The Market Is In A Confirmed Uptrend

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Step one in CANSLIM is only investing when the market is trending higher, but how do you know if the market is in a confirmed uptrend? The easiest way is to subscribe to the Investor's Business Daily. On the front page of the IBD each and every day is the Big Picture column. This column contains a box called the Market Pulse and inside you'll find the current outlook. The outlook will have one of three conditions. They are:


  1. Market in confirmed uptrend

  2. Uptrend under pressure

  3. Market in correction

If you are a CANSLIM investor, you only want to invest when the market is in a confirmed uptrend. This is because most stocks follow the overall market trend. By investing with the trend, you are more likely to have your stocks price go up. If the market is in a correction, this puts additional pressure on your stock's price. You want to avoid this.

By following the Big Picture column, you'll keep on top of what the IBD editor's expert opinion of the direction is. This saves you the time of keeping track of it.

Here's a tip that most people might not know. Whether you are an IBD subscriber or not, you can follow the IBD TV Market Wrap video on a daily basis for free. This video will help you keep tabs on the overall market direction. Watch it daily. In addition, you can review the charts of the general market indexes for free as well.

You'll find that your stock market investing results will improve if you only invest with the market in confirmed uptrend.  This is why O'Neil recommends you pay close attention to the market's action everyday. If you are new to investing, I'd start by learning the "M" in CANSLIM which is how to determine the overall market direction. Read more in How To Make Money In Stocks.

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3 comments

Stock Market For Beginners delete September 18, 2010 at 12:30 PM

I loved your post, however, I think that most beginner stock market investors cannot tell a confirmed uptrend from a sideways market. Sometime beginner investors think that a sideways market might be a confirmed uptrend.

I think that with sufficient education and seasoning stock market investors can tell whether a market is in an uptrend, down trend or a sideways market. It took me 3 years to finally understand how a market forms an uptrend, I use MA to confirm whether we are in an uptrend or a down trend. Maybe you can educate readers, especially the beginner stock market trader how to use indicators to confirm uptrend, downtrend or sideways markets.

Great job on you blog very informative

Thanks for the comment. I didn't initially find it as it ended up in my spam comments for some reason. At some point, I'll put together a video series addressing market direction that might help someone new.

Thanks for the post. Always wondered if there was an easy way to see the market trend.


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