As of 12/20/2024
Indus: 42,840 +498.02 +1.2%
Trans: 15,892 +32.54 +0.2%
Utils: 986 +14.76 +1.5%
Nasdaq: 19,573 +199.83 +1.0%
S&P 500: 5,931 +63.77 +1.1%
|
YTD
+13.7%
0.0%
+11.9%
+30.4%
+24.3%
|
 44,200 or 41,750 by 01/01/2025 16,100 or 17,700 by 01/01/20251,050 or 975 by 01/01/202520,500 or 19,300 by 01/01/20256,100 or 5,775 by 01/01/2025 |
As of 12/20/2024
Indus: 42,840 +498.02 +1.2%
Trans: 15,892 +32.54 +0.2%
Utils: 986 +14.76 +1.5%
Nasdaq: 19,573 +199.83 +1.0%
S&P 500: 5,931 +63.77 +1.1%
|
YTD
+13.7%
0.0%
+11.9%
+30.4%
+24.3%
| |
|
44,200 or 41,750 by 01/01/202516,100 or 17,700 by 01/01/20251,050 or 975 by 01/01/202520,500 or 19,300 by 01/01/20256,100 or 5,775 by 01/01/2025 | ||
My book,
Trading Basics
Here are tips to make your shopping for stocks a more delightful experience.
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$ $ $
This article discusses a dozen stock picking tips.
About the first of each month, I search for stocks to buy, but only if there's enough cash available, of course. I wrote my own stock charting program, so features such as the ones I describe below probably won't be available in your program. Here's a dozen items that I look for when shopping for stocks.
I switch to the weekly scale because it's not a scale that I use often, and it shows things I miss on the daily charts. The scale goes back to September 2001 on my 23" monitor, so I get a good view without having to scroll anything. I just press Enter for the next screen.
The stocks are sorted by industry, so I also get a feel for which industries are doing well as I page through each stock. A beep sounds to tell me I've moved into a new industry group.
I also have my program set up to color the borders of the chart green or red, depending on how good the industry relative strength is. I want to invest in strong industries, but sometimes bottom fishing in the discard bin can give good value. I usually won't discard a stock just because of a weak industry.
Those are stocks that made a big run up and have been siding lower ever since. Intel is an example. It peaked at 75.81 in August 2000 and has been trending lower. A study of price mountains confirms that it takes years for a stock to make a new all-time high after a price mountain.
Even if the stock does not show a price mountain, I will throw it away if price is sliding down for year or more (or less!). Why take a chance on a stock executing a turn-around when I can find another that's already moving up?
If the stock is moving higher, I want to find a shelf, a platform or congestion area such as the top of an ascending triangle upon which the stock sits. I will buy as the stock climbs out of that congestion. If it's already made its move, then I'll wait for a throwback.
I switch to the linear scale from the log scale on the price axis. That compresses the price movement when the stock makes a large move. It tends to look flat. Breakouts from these flat bases can lead to exciting moves.
I also look for significant overhead resistance to be far away -- like double the current price. If a cloudbank pattern exists, then that's even better. I'm looking to hold the stock for months, perhaps years, to allow price to climb, pushing through nearby resistance. I like to see the path to a stock that might double be free of overhead resistance, but that's wishful thinking. Still a clearly defined target that's far above the current price is what I aim for. That way, whenever I'm tempted to sell, I can look at the target and remind myself that we're not there yet. The CHG trade was one that used a target to exit.
On the daily scale, I avoid buying during a straight-line run. Instead, I prefer to see price break out of a congestion zone as I described above. To buy when price is climbing is to invite the run to end and retrace. That retrace may take price down far enough to cash me out, so I will wait for price to collapse before entering.
If it doesn't retrace, it doesn't matter because I know that another trading opportunity in another stock will come along eventually. Of course, that means you can miss big winners. A number of times I picked the right stock at the right time, but didn't buy because it kept going up. After price had tripled, I found myself saying, "If only I bought..."
I will read my favorite research reports to find out how the company is doing. This includes a look at the fundamental ratios. Is the company a value play? Does their business have upside growth potential? I threw out Vulcan Materials (VMC) because the Obama infrastructure improvements haven't been exciting enough to push this stock up much, homebuilding is still slow and so is the commercial side. This could be a turn around play, but buying now means I'd be locked in for months with the stock moving up slower than the indices. I tend to throw out too many stocks because of poor fundamentals even though they have a good technical picture.
I like to see insiders buying large amounts of shares and lots of them buying. Having one buy 30k shares is good, but it's not as good as five buying 6k shares each and none selling.
Academic research that I've read says that if insiders buy and none sell within the past 6 months, then the stock tends to outperform over the coming year.
Once I finish the weekly scan and get a pile of stocks to choose from, I narrow that list by looking at the fundamentals. Once that's done, I switch back to the daily scale. There I look for entry points. I'll click on my Buy button which pastes a checklist into my computer. Items such as target price, stop price (it makes a suggestion using a volatility stop), position size (also suggested), scores the pattern, if applicable, the next earnings to make sure I'm not buying within 3 weeks, and so on.
Once I'm filling out my checklist, that usually means I'll be buying the stock. Often it will take days or even weeks for price to move where I consider it a buy. I don't mind waiting. Patience is the sign of a professional.
That's most of what I look for when shopping for stocks, but I forgot the main one. I only buy stocks that go up. If they don't go up, I don't buy them. 
Yes, I borrowed that from Will Rogers.
-- Thomas Bulkowski
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