Finding Those Hot Stocks
Finding the best top stocks really isn’t that difficult. What has happened, as it does in any business where people are trying to justify a large fee, is many people over complicate the process of finding hot stocks.
They will go on and on about earnings, revenues, insider transactions, sales revenue, price to sales, etc. And technically they will produce all kinds of weird and wonderful price patterns. Head and shoulders, ascending triangles, rooftop cliff hang offs, etc.
But it is much simpler than this. Here is what you do:
1) Go with the market. You can’t beat the market. Go long in bull markets. Keep out of bear markets. How do you do this? Use my 1-2-3 on the weekly charts as this will keep you on the right side of the market about 80% of the time.
2) Now look for the leading stocks. Keep to stocks above $30 that have already doubled in the past year. Make sure they have volume at least 500,000. So you are only looking for high pried, liquid, leaders. The stocks the institutions will buy into. Keep away from penny stocks. If you was going to buy into a business would you buy an A+ grade one that has fantastic proof of past earnings and great products? Or would you take a “chance” on some flea bitten, chapter 11 business?
3) Use the weekly charts to time your entry on these high priced, leading stocks. Trade them well. By this I mean cut your losses. Let your winners run. Be realistic. 25%+ p.a. returns are way better than 99% of professional money managers out there.
