KEY STATISTICS & TECHNICAL ANALYSIS

Yahoo Finance or MSN can also be used for free but make sure you cross reference the numbers from time to time as they aren’t always correct. Using Daily Graphs, Vickers, and Weiss can become quite expensive along with the subscription to IBD but we feel they are well worth the investment since they seem to offer the most unbiased, high quality information. As long as all of these tools are justified expenses based on profits from your portfolio, there is no need to worry to spend the extra dollar.

Through our service, we try to produce high quality screens that give you the opportunity to invest for a profit for a minimal charge per month or year. The stocks that make our screens do take dozens of hours per week to assemble and must be updated every week of every year. The stock market is a job, not a hobby as most people in America seem to believe.

Once we feel good about a stock’s fundamentals, it makes a new list to be studied using technical analysis (reading charts). At this point, our founder and president uses his own eyes and charting skills to study the charts.
We don’t have fancy subscriptions or software programs that tell us what stocks to select. Every stock that makes a daily or weekly screen will pass by the eyes of our President several times before it is ever uploaded for your viewing.

We look for:
Properly forming bases
Pivot points
Breakout areas
Extended stocks
Stock pulling back to key support lines.

Finally, when we are about to purchase or sell a stock within our own portfolios, we personally spend many additional hours studying the fundamentals and technicals confirming our beliefs as to why this stock will go up or down.

Our Buying Strategy:
As outlined above, we first we look for solid fundamentals (accelerating earnings, sales and ROE) by using a combination of several screeners on the web to narrow down our list of quality fundamental stocks.

Next we study the charts (technical analysis) and look at every stock screened. We look for stocks forming specific bases or specific up-trends. We pay particular attention to stocks that are poised to move and especially stocks with potential to move quickly.

Please realize that we don’t buy all of the stocks that make the screens, especially the multitude of stocks that have a chance to make the daily screens.

Our buy and sell candidates only come from our final screens each week. Some stocks are bought and then immediately sold if they break down. No one is perfect and mistakes are part of the game when it comes to Wall Street.

One of the biggest, if not the biggest rule for us is to: CUT ALL LOSSES QUICKLY – NO QUESTIONS ASKED!

Insight:
I have been studying the markets for several years now and I have listened to what people before me have said and one thing that has been proved over and over (by studying thousands and thousands of charts) is the fact that stocks making new highs usually go higher. Analyse at any chart that goes from 20-40, 30-60, 60-100, etc… Every time that stock ticked up or seemed to be topping, more support funneled in and propelled the stock even further. Our All-Star list is full of stocks that continue to go higher, even when the untrained investor feels that they are too high.

One fact caught my attention, a fact that is repeated by some of Wall Street’s greatest such as Jesse Livermore, Gerald Loeb, Nicholas Darvas and William O’Neil: “buy high and sell higher”. As I continue to invest, study and read, I realize that stocks showing strength will usually continue to show strength until the environment changes.

This led me to develop the screens and made me focus on the specific stocks that started to show up in my screens several nights per week and multiple weeks at a time. When I started to see stocks over and over, it was a simple signal to check deeper. Most of the time, the charts would show great potential so I would buy.

I suggest all members of our organization to screens stocks all week long using our screens and your own and then to develop an end of the week screen narrowing down a list to the highest quality stocks using both fundamental and technical analysis.

In order for this method to work, the “M” in CANSLIM is the MOST important aspect to your success. For those of you not familiar with CANSLIM, the M stands for market health, if the market is bad, DON’T BUY (We don’t buy). No matter how good the fundamentals and technical, stocks have a high risk of failure during weak markets. If you don’t learn this lesson now, you will be taught by the market some day and it will sting, especially your wallet.

We don’t discriminate when a stock makes our screens; we include every qualifying stock that makes our daily screen, even if we personally don’t like the company. Emotions must be tossed out the window and facts must be the only aspect analyzed, even if you don’t like the product. We don’t like insurance stocks and feel reluctant to post them when they make our screens but then we would be cheating ourselves and community members – How do we know they won’t be the leaders?

Sometimes, groups such as insurance will bring down our overall screening results but not our actual portfolio results, as we would never buy them in real life. They exist only in our research. When we see groups like this (Insurance) rise to the top of our screens, it warns us that a correction may be coming and we start to look for sell signals on our own stocks and head for the sidelines if we are forced to sell.

Keep in mind, our system works best in bull markets while we urge our members to play it safe during sideways markets. Please read over our Philosophy and Education Page and the Technical Analysis Sections to see our system in action. Our weekly updated Case studies will allow you to learn in real time as we post specific stocks that are on our screens at the current time.

Below is a recap of some key categories to use when looking for a stock to purchase or sell. We separated it into two lists between fundamental and technical analysis:

Key statistics to use in fundamentals:
Earnings (current, past: quarterly, yearly and future estimates)
Sales (current, past: quarterly, yearly and future estimates)
Return on Equity (ROE)
Price/Earnings Growth (PEG)
Price/Earnings Ratio (rise over time of base)
Debt/Equity
Assets, Liabilities
Accumulation/Distribution ratio
Up/Down Volume over past several months
Number of Institutional Holders (is this increasing or decreasing recently)

Key things to use for technical analysis:
– Look at the 1 year daily chart
– The 1 year weekly chart
– Check volume action when bases are formed
– Look at Point & Figure charts for support and resistance lines
– Look for new 52-week highs

Leave a Reply

Your email address will not be published. Required fields are marked *