Today, I wanted to talk about why you should buy stock in the market leaders. This is my third article in my series that follows how I am setting up my investment strategy. But to bring you up to speed, each day, I'm walking you through my stock market investing strategy. Here are links to the first couple of posts:
Buying Stocks: A Case Study
Buy Stocks: Where I Started
If you want to buy stocks, you have to sit down and develop your day to day routine. I am a strong advocate in following the same specific steps each day. The only way you can do that is by taking note of your actions and writing them down. My steps might be different from yours. What matters is that you get results with your system.
Now when I talk about my system, I don't mean I developed the CANSLIM theory. But what I am talking about is making the strategy my own. You need to do this to master the strategy. Break every step down in complete detail so that you don't think about the process, you think about the big picture.
As usual, the first step I take each day before I look for stocks to buy now, is by looking at the general market direction. I like to look at each market index and then watch the IBD TV Market Wrap video to verify my analysis. Finally I read check out the Big Picture column and the current market outlook. The market remains in a confirmed uptrend and there was no distribution in the market indexes.
The next thing I do is check my current holdings. Yesterday, I picked up 36 shares of JKS for $27.87. Today it was up 4.67% on heavier volume to close at $28.91.
Jinko Solar was also listed as one of the leaders today on the front page of the IBD. I expect this stock to be somewhat volatile because of it's low float of 21.7 million shares.
Now that I've opened a position, I wanted to set up some price targets. The first is my stop loss of 8 percent.
Stop loss $22.80
I'm using mental stops instead of hard stops and also only doing my trading at the beginning and ending of each day.
My next price target is a 20% profit.
Profit target $33.44
So, we'll keep an eye on Jinko Solar (NYSE: JKS)
But learning how to buy stocks starts with screening. Each day, I watch the Stocks On The Move screen and today the following stocks popped on my radar.
RCI, MSB, JKS, EMN, EW, BAP, SLW, HDB, UA, MOS, PAY, OPEN, JOBS, SINA, LSTZA, MNRO, AAPL
I then apply my specific criteria and knocked all but three off my list. They were:
MSB, JKS, OPEN
MSB was new and so I added that stock to my watch list.
I decided to open up my investopedia simulator and pick up a $1,000 of NASDAQ:OPEN which should be about 15 shares. In looking for stocks to buy, I chose Open Table, Inc because of it's low float and it's seven weeks of higher closing prices. It was also mentioned on the front page of the IBD as a market leader.
The goal is of this case study is to get a track record of trading results. My stock market investing objective is to be right 1 out of 3 times. I've got to cut losses at 8% and get gains of 20%. I'll keep you posted as I go along.
Good luck when you start to buy stocks online and let me know how it goes.
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