Market Direction

The first question you should ask yourself when making the decision to invest your hard earned money is "What is the market doing"?  Is it in a confirmed bull market, consolidating its recent gains or entrenched in a bear market and heading south?  This is were your research should start since 3 out of 4 stocks will follow the trend of the market.  Put away your financial magazines and tune out all the opinions heard on CNBC.  The market itself will reveal clues to you as to where it’s going based on its volume and price action.

Industry Groups

Assuming the market is in a confirmed rally, you are ready to single out the industries that are leading the market.  The "biggest winners" will come from these leading industries.  The innovative technology and biotechnology sectors tend to lead a new bull market, but it’s also important to spot other  trends.  For example, with record low interest rates, housing and mortgage stocks did extremely well, as did oil stocks with soaring crude prices.   Sector rotations may occur a couple times a year, so it’s important to be in synch with where the money is flowing into the market.

Individual Stocks

After compiling a list of top industries, you are now ready to narrow your focus further and single out individual stocks for a potential purchase in the near future.  We started out with the big picture of the market and are now ready to focus our attention on the details of a company and its stock chart in order to make an informed buy or sell  decision.  Top stocks in each industry group will show superior fundamentals, relative strength, a technically sound base and institutional support.

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