I am taking the time to help others learn the basics in evaluating stocks for investment using both fundamental and technical analysis. Both tools are equally important in making serious decisions with your hard earned CASH!
If you wish to invest in stocks, treat it like a business, NOT A HOBBY. (ex: a retail outfit can't make money if it doesn't have goods to sell; the same goes for investors, without cash, you can't invest). You need rules and you need to follow these rules or money WILL be LOST. Once proven rules have been established, they cannot be broke or you will lose money. Everyone loses money in investing but we must learn to cut losses quick and allow gains to develop. Small losses are acceptable because they teach us lessons that allow us to win big!
Start your search by looking for stocks with superior fundamentals. After fundamentals are established, look to see if this particular stock is in good company, by this I mean a strong industry group - similar stocks, historically move in the same direction (this is fact not opinion). This is not to say every stock in the industry group will move higher or lower because a sister stock is going in that direction (this is a generalization rule). After the industry group has been confirmed strong, determine if overall market is in a specific trend (up, down or sideways).
If you are long a stock, the market must be in a confirmed up-trend, if you are short a stock, confirm a down trend. Note that 75% of all stocks will follow in the direction of the overall market. Don't fight the trend, the market is always RIGHT.
Let the market and the stock dictate how long you will be in a position. Don't worry about time frames; price and volume will tell you when to exit the position as long as you follow rules.
After fundamental have been established, you must study the technical side of each individual stock, the specific industry group and the general market trends. Record if the stock is forming a proper base, if it's about to break out of a base, if it's extended or if it's pulling back to a key support line.
At this point, add any qualifying stock to your watch list or buy the stock according to the technical entry signals (remember the fundamentals have been established earlier).
Key numbers 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
About the Author
Chris Perruna
http://www.marketstockwatch.com
Chris is the founder and CEO of MarketStockWatch.com, an internet community that teaches you how to invest your money with solid rules. We don't stop at just showing you our daily and weekly screens, we teach you how to make you own screens through education. Through our philosophy, you will be able to create your own methods and styles to become successful.
Ashton group transportation logistics management ..If you have a pension plan at work you will... Read More
With over 6,000 mutual funds available, it may be tempting... Read More
Today we are inundated with tons of information about the... Read More
Trading is a fascinating activity.There are so many layers to... Read More
The thinking process of the brain relating to the... Read More
According to Investopedia Inc. the penny stock market has seen... Read More
I read a comment by a forum member on another... Read More
A recent cartoon in my daily newspaper showed two guys... Read More
Stocks breakout from properly formed bases everyday but many investors... Read More
In 1960 an engineer working for a watch company in... Read More
You should ignore analysts on TV, the radio, the newspaper... Read More
We need a rabbit!This was a pretty horrible week for... Read More
The World Bank claims that some two billion of the... Read More
Where is the beef? Or maybe it should be where... Read More
(1) CHK stock price $16.74, NAV $32.5CHK is my favorite... Read More
How do you make money without picking tops and bottoms?I... Read More
Congress recently passed another new law that is supposed to... Read More
Sometimes the best way of lowering exposure to risk is... Read More
One of the basic laws of physics is that a... Read More
What does it mean to short a stock?This means that... Read More
Two weeks ago I wrote about what the Securities and... Read More
If you don't know what a Roth IRA is then... Read More
For years I have been saying you must have a... Read More
We are already in it, but you can't see it.... Read More
An insane person cannot evaluate an insane evaluation system.As you... Read More
group transportation logistics management Highland ..You should ignore analysts on TV, the radio, the newspaper... Read More
One of the basic laws of physics states that a... Read More
The thinking process of the brain relating to the... Read More
Let's hope you did not have any of the Enron... Read More
Ever done any whitewater rafting or canoeing? Long periods of... Read More
Peter is a professional trader, Paul is not. Peter has... Read More
For the last few weeks we have seen the stock... Read More
Picture one of those clubs where only the real heavyweights... Read More
Any online investor / trader seeks an excellent off or... Read More
How do you make money without picking tops and bottoms?I... Read More
The debate rages all over Eastern and Central Europe, in... Read More
Because you don't feel too sure about which stock or... Read More
Mutual funds are doing more and more to discourage investors... Read More
When you become interested in a stock or mutual fund... Read More
How is it possible that trash Companies are posting less... Read More
How can you dispel an illusion unless you look directly... Read More
Exchange Traded Funds (ETFs) are a group of passive index... Read More
The Surgeon General of the United States says that smoking... Read More
Everyone who follows the financial news has heard of mutual... Read More
Several times each month I am solicited by various market... Read More
You remember (they show it on TV every year) the... Read More
We have two candidates for president that have really different... Read More
Because there are so many stocks that are NOT paying... Read More
For years investors have been taught to look into the... Read More
Every day I see in the financial section of newspapers... Read More
Stocks & Mutual Fund |