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.