Question:
I am a new subscriber and novice investor. Currently I am trying your site for one week. I found the tutorial really helpful. However, I am not clear how your site can help me picking specific stocks. Should I pick stocks from the "stock watch"/breakout center llists? How does the "Model portfolio" come into the play ? Please give me some hints to link your tutorial with your service together. Thank you very much.
My Response:
There are a few different ways to find top stocks and the method you choose may depend on your experience level. Since you’re a beginner I’d recommend the following:
1. Read the Stock Watch reports to get an idea of what a great chart looks like. These reports are sent out once a week or so. The stocks contained in these reports highlight the best opportunities for the week ahead. They provide long suggestions, short suggestions as well as Quick Strike Profit plays which are a new feature highlighting explosive profit potential swing type trades based entirely on technicals where holding periods are much shorter
2. The Model Portfolio takes it one step further and allows you to see a real world portfolio in action. I provide detailed info on why the stock was bought or sold as well as updates at critical points. It’s a good way to get a feel for the intricacies involved.
If you’re familiar with what a quality chart looks like and understand price/volume movements as well as support and resistance levels, you’re probably ready to move on and use the powerful screening tools here to discover your own opportunities. For this, the Breakout Center contains the screens to find these opportunities quickly. You’ll notice several links across the top, which are pre-defined screens.
1. Breakouts: this area will list breakouts based on the time period you use. For example, notice there are currently no breakouts listed for today. If you choose "Yesterday" from the drop down menu, you’ll notice CNCT which broke out yesterday. You may also see breakouts that have occurred in the past 2 weeks and last month.
2. Breakout Watch: this is where you’ll want to focus your attention when looking for breakout stocks. The default sort is by Total Rank, so the highest quality stocks are always at the top. At the top currently are URBN, CRAI and NUCO. You may have noticed that I place a lot of emphasis on the DI indicators which indicate demand for a stock. What I do is use these screens in conjunction with the DI indicator. So starting at the top, I’ll look for stocks with the highest DI scores (it should be noted that most of the stocks in this screen will have good DI Scores since stocks with low DI scores are not included). So what stands out? One stock that stands out is NUCO which has very DI scores and is in a buyable range (2% above the pivot). MCRS and GBX also look good. You’ll always want to consult the charts to make sure the technical is healthy (ie. smooth base, with little volatility).
3. Play the 50 Day: the goal with this screen is to find stocks bouncing off the 50 day moving average. I’m a big fan of using this strategy (maybe more so than purchasing breakouts to be honest). There is no way to tell if the stock is surging above resistance of the 50 day or dropping to meet support. It’s just a list of stocks, ordered again by Total Rank near support of the 50DMA. You’ll need to look at the charts to see exactly what’s going on. Looking at the first 3 URBN, AXYS and MCRS. URBN is coming from below support, so I’ll eliminate that. MCRS is bouncing nicely but notice it has not yet broken out. I think its ok to purchase in this situtation provided the chart looks outstanding and the stock is fundamentally superior (both true) . MCRS is a stock I’ve been watching carefully. AXYS also is bouncing off support, but notice the technical action is very sloppy and its a thinly traded stock. So, I’ll eliminate that. I’ll continue to move down the list, quickly scanning the charts.
Using the tools described above, I can find a great list of buy candidates in about 15 minutes of work each night. From there I’ll put into a real time watchlist and set alerts for my buy point.