March 4th, 2010
Most of my trading life was wasted on trying to be the first to buy into stocks that “were going to move” before others discovered them. I say it was a wasted effort because what I have since learned is that it’s much smarter and less frustrating to just joining the herd, running with them and also buying the stocks they’re chasing (it’s much easier to do than trying to find stocks they might chase in the future).
True there might be some emotional reward in picking a stock early on before anyone else but then you run the risk of holding it in your portfolio for several months waiting for everyone else to discover this gem you found; plus, you may be holding something they, for some reason decide never to pill onto. Yes, you found it first but 1) how long did you have to wait for everyone else to pounce on it and 2) what about all the stocks you took a sizable loss in because they never really catch fire?
How do I know which charts the herd is chasing? The market and the charts tell me. That’s why I now want to increase my chances for winners and reduce the chances for losses by: 1) making sure that I buy stocks when the market is in a clear up trend, 2) buy stocks with good momentum and 3) buy as soon after the signal the tug-of-war between buyers and sellers has ended (usually on a breakout).
In “Looking For Next Phase And Assembling A Watchlist” of February 26, I said I would offer lists of candidates that meet the above criteria through a couple of different scans:
- Stocks in consolidation patterns after clear and convincing breakouts (New All-time Highs) – February 26
- “Stocks on the Move” (based on fundamental and technical indicators)-March 2
- Stocks with strong Relative Strength
- Stocks with clearly bullish momentum indicators (e.g., all moving averages favorably aligned and pointing up)
Today’s list are stocks culled from a list of 184 that are demonstrating some positive relative strength. Of the total, 9 were previously included in the New All-Time High list and 41 in the “Stocks on the Move” List leaving 134 new stocks to choose from (click here for this complete list and on images to enlarge):
- VRSN (Verisign)
- HSY (Hershey)
- SFL (Ship Finance)
- SFI (Ishtar Financial)
- ALL (Allstate)
- FO (Fortune Brands)
- PACR (Pacer)
- MW (Men’s Warehouse)
So far that’s about 300 stocks to choose from. When the market does finally resume its upward trend there’s going to be more than enough names to pick from.