Investor Spotlight

How To Out Perform The Market

The rules are very simple.

IBD (Investors Business Daily) has shown that growth stocks tend to perform 2 to 2 and 1/2 times better than the overall performance of the market using $SPY as a barometer of the market performance. If you follow their system of CANSLIM trading, it will consistently help you outperform and profit in the market. The system may seem counter intuitive to conventional wisdom that the hedge funds and money mangers preach on wall street. IBD system says:

Buy "High and Sell Higher."
Do not fall into the trap of "Buying the Dips."
Buy only the "Best of the Best Stocks in the Leading Sector."
Stay in tune with the market and buy stocks during "Confirmed Uptrend"
Always buy something on a "Follow Thru" day.

We had a "Follow Thru" day on Feb 14th (Valentines Day). I had identified $ABMD as a good growth stock candidate. It appeared on my scans while I was going through my weekend routine of building My Stock Watch List for that week. Market was in correction at that time and that is the time to be diligent with your weekly routine.

Details of $ABMD Trade

Market was in correction on Thursday Feb 8th and $SPY, $QQQ and $DJI had all sliced down below the 50 day sma(simple moving average) and all the way down to the 100 day sma. $ABMD on the other hand was still trading at the 21 day ema(exponential moving average). This was a confirmation signal that the institutions were not willing to give up on this stock. My analysis showed that this was one of the leading stocks in the leading sector. Market began to rally for 3 days in a row and valentines day was the 4th day of the rally. $ABMD was being accumulated by the institutions just as soon as the market opened. $QQQ, the leading index also began to surge as well. All signs indicated that we would have a "Follow Thru" day if this momentum kept up and it certainly did. Lots of technology stocks were also breaking out on this day too. Following is a brief scenario of how this stock was handled:

$ABMD surged +300% in volume on valentines day. That's a confirmation of a successful break out.
My Trade Plan for initial profit exit and loss exit was highlighted in my blog post on valentines day when we had a "Follow Thru" day.
Initial position was filled at $245 during the first hour of trading on the 4th day of the rally. This was an early buy point ( 4% below the ideal buy point).
Follow up position was added the very next day at open at precisely the resistance line of $255.42.
Resistance was at $255.42 and an ideal buy point according to IBD rules would be $255.52 - 10 cents above the resistance.
Both the positions were filled precisely according to My Trade Plan. This allowed me plenty of cushion should the market falter.
While the market was retracing last week, $ABMD kept up its momentum and began trading closer to the 8 day ema. It was performing better than the overall market.

Currently, both the positions are are showing the following profits:

1. First position at $245 (early buy point) is +20% in 3 weeks.

2. Second position bought the very next day at open at $255.42 is +15% in 3 weeks.

3. Both positions combined is + 17.5% on average in 3 weeks.

4. $QQQ which is the leading index is +6.44% in the same time period.

$ABMD has performed +2.72 times the leading index. All this was possible because I followed the IBD principles of investing.

Mentoring Program

Were you panicking last week when the market was correcting? Do you know how you can Time the market?
Did you have a strong watch list to select stocks to buy when the market indicated a "Follow Thru" day.
If you are feeling sick to your stomach with the train wreck we had faced in January, than you need to make a commitment NOW to learn:

How to TIME the Market?
How to find the Winning Growth Stocks?
How to Buy the Stocks Right?
How to Plan your Trade for Profit, Loss and Time in the trade?
How to Sell your Stock Right?

I shall be opening up a very limited number of slots for mentoring in March. Schedule a FREE 30 minutes of "Discovery Call" with us and see how best we can help you become a consistent and a profitable trader and an investor in 2018. Don't procrastinate and pass up the opportunity of making a difference in your portfolio. Start out the new year with a resolution to invest in your education.