Learn The Best Stocks To Buy

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.