Tuesday, July 27, 2010

Great Stock To Buy

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It seems everybody that visits my Stock Market Investing Today wants a list of great stock to buy. I discussed this earlier in an article called Great Stock To Buy Today. What surprises me most about the market is that stocks with great fundamentals don't always go up and stocks with lousy fundamentals soar. A better idea would be to create an article called great stocks to research today.

Anyway, here's a list of stocks that could be potential stocks to buy because they showed good price and volume action. Analyze each stock for it's fundamentals and then look at it's chart to determine buy points.

DD, CMI, HDB, CIB, IDSA, CPLA, PRAA

Of these stocks the one that I liked best and that might a stock to buy is Cummins (CMI). Here's the chart.





When looking at to determine if this is a stock to buy today, the first thing I noticed was that volume was up over 81% today on a higher price. I would definitely call this a breakout day.

After checking the price and volume action, I checked the earnings and sales of Cummins. The EPS change last quarter was up 317% which is great. The sales were up over 31% as well. The one thing that bothered me was that the data on IBD for sales didn't match the data on the stock checkup. When I get a chance I am going to call IBD and ask them what the deal is on the discrepancy.

When calculating a buy point, I was unsure whether to classify this chart pattern as a cup with handle or a double bottom. I elected to classify it as a double bottom. The high point on the middle of the double bottom pattern is $77.10 which would give me a pivot point of $77.20. The CANSLIM strategy recommends to not buy any stock that is extended 5% over the pivot point. If I take the closing price today of $79.43 and multiply it by 1.05 that equals $81.06. That would mean that I'm still within the 5%.

Let's say however that instead of a double bottom, it was instead a cup with handle. This would then create a pivot point of $75.48. Multiplied by 1.05 would be $79.28. This would make it slightly extended over the 5%.

In any case, as part of my learning process, I'm going to place a buy order in my stock simulator for $1000 of CMI and make it my stock to buy today. For more information be sure and check out my post called The Ultimate Buying Stocks Guide.

Good luck investing.

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