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.
Lincoln Stretch rentals Alsip ..There are formulas for just about everything, but it has... Read More
Minority Report the movie may not be far off if... Read More
Index Fund Trading can be one of the most profitable...or... Read More
You probably know the story of Sherlock Holmes and the... Read More
Two weeks ago I wrote about what the Securities and... Read More
Let's first define insanity. It is doing the same thing... Read More
Humpty Dumpty had a great fall and all the King's... Read More
I continually hear from economists, talking heads, other market letter... Read More
The gleam and bright lights of Wall Street lure in... Read More
Alfred Winslow Jones started hedge funds in 1949. He was... Read More
Several times each month I am solicited by various market... Read More
The thinking process of the brain relating to the... Read More
'Sector funds are too risky.' 'I doubled my money with... Read More
Let's go into the details of why non-indexed mutual funds... Read More
An insane person cannot evaluate an insane evaluation system.As you... Read More
Regardless of the fact that the world's stock markets have... Read More
∙ Make every investment in the stock market a long-term... Read More
Stock trading can be a very profitable activity. You can... Read More
Most stock traders know that momentum trading can be a... Read More
The World Bank claims that some two billion of the... Read More
You have decided to buy some stock or mutual funds,... Read More
I feel that an investment strategy in the stock market... Read More
(1) CHK stock price $16.74, NAV $32.5CHK is my favorite... Read More
Wouldn't it be nice if you were only in the... Read More
04/28/2005NASDAQ dropped -12.5% year to date in 2005. S&P500 index... Read More
Western Springs shuttle limo ..I continually hear from economists, talking heads, other market letter... Read More
The Macedonian Stock Exchange (MSE) is not operating successfully. True,... Read More
When most analysts, financial planners, fund specialists and investors try... Read More
Even if you don't own any of their stock or... Read More
The demand for world oil is increasing while world reserves... Read More
It has often been said that there is only two... Read More
Index Fund Trading can be one of the most profitable...or... Read More
Do you have a financial planner? Does one of your... Read More
There are red lights, green lights, blue lights and spot... Read More
I love roller coasters. The steeper the better. High and... Read More
You have decided to buy some stock or mutual funds,... Read More
As the man said, "I've got some good news and... Read More
Sidney felt sick as she looked at her latest OptionsXpress... Read More
It depends on your level of understanding of the market... Read More
You remember the story about the frog that was put... Read More
With the internet such a huge part of our daily... Read More
Everyone who invests in the stock market wants to be... Read More
If you've ever flipped on the television to CNN Financial... Read More
Are hedge funds a suitable investment for you? Hedge funds... Read More
As a novice trader, you'll often feel the need to... Read More
For some "long term" would mean holding a stock position... Read More
The thinking process of the brain relating to the... Read More
Every day in any financial publication you will find the... Read More
The ABC's of Stock Trading SuccessStock trading success...why is it... Read More
Humpty Dumpty had a great fall and all the King's... Read More
Stocks & Mutual Fund |