Investor Spotlight

Buy High Sell Higher

"Remember, keep it simple. Investing is hard enough. Stick to the basic rules of CAN SLIM and don't complicate it by getting super - tricky."

William J. O'Neil (Founder of Investors Business Daily)

We are always looking for a deal when buying a house or a car or clothes and furniture. Everyone loves a good sale and a bargain. We have been accustomed to thinking that one should "Buy Low and Sell High". Growth Stock investing and trading however requires for one to think a bit differently. It took me a while to fully understand this concept when I was first introduced to IBD(Investors Business Daily) very early on in my stock trading career. Now it seems clear as a day to me after trading all these years and analyzing 150 to 250 leading Growth Stock charts every week for years.

One very easy rule to follow is "Buying the leading stocks with a breakaway gap." It's one of the most profitable endeavor with Growth Stock Investing. If the stock gaps up past the +5% proper buy point that IBD identifies, its quite OK to go ahead and institute a stock position as close as possible to the opening price of the stock the next day. This may sound counter intuitive to ones's conventional thinking of buying low and selling high. The more powerful the surge in price with equally powerful surge in daily trading volume of that stock, higher the stock will go in price with the passage of time. It takes several weeks for the institutions to accumulate the position. They will continue to accumulate the position over the next several weeks. All we have to do as retail investors is follow the lead of the institutions and hold onto this stock.

$XLNX +27% in 8 Weeks

Here is the synopsis of how the breakaway gap worked with $XLNX in the last 8 weeks:

Dec 3rd stock attained an all time high of $95.18. IBD(Investors Business Daily) identified $95.28 (10 cents above the all time high) as an ideal buy point.
IBD rule suggests that one should not chase the stock when it's +5% beyond the buy point.
January 24th (Thursday) the stock gapped up after the earnings report and surged +18.43% to close at $106.06. It surged past the +5% buy zone of $100.04.
Trading volume during the earnings report was 6 times the normal average trading volume. Institutions were grabbing every available share of the stock and were bidding up the price of the stock in the open market.
January 25th (Friday), stock position to be initiated at market open price of $105.92 (+11.17% past the ideal entry).
February 11th (Monday), the stock had attained +20.59% from its ideal buy point of $95.28. Such a surge also invoked the "8 Week Hold Rule". This rule suggests that when the stock surges +20% from its ideal buy point within 3 weeks, it ought to be held for the next 8 weeks. Stocks tend to go higher when there is such a powerful rally on the stock.
April 12th (Friday), the stock has attained the end of 8 weeks. Currently its +27% from the day the stock was initiated the day after the powerful gap up. It's also +41.07% from its ideal buy point of $95.28.
IBD rule also suggests that one should consider harvesting some profits once the stocks attains a gain of +20 to +25%.
IBD rule also suggests that one should evaluate the stock at the end of the 8 week hold period.

What should one do with $XLNX when the market opens on Monday morning April 15th?

There are several possible strategies one can utilize after attaining such a powerful gain of +27% within 8 weeks (+175% annualized gain). I shall highlight a couple of strategies in my post next week how best one could lock in profits, hold part of the position for more gains or possibly adding more shares last week when the market was continuing to trend higher. Stock has been hovering between $125 - $130 range during the last 3 weeks. It has formed a "3 weeks tight" base. Earnings for the 1st quarter is scheduled to be reported on Wednesday April 24th.

Mentoring Program

We had a "Follow Thru" day on January 7th. $QQQ the leading Growth Stock index has performed +18.71% in the 14 weeks since that day. That's an annualized return of +70%. Market continues to act well right now. April is traditionally the best performing month of the year when you look over the average results for the past 50 years. We have already attained +3.43% for $QQQ for the first 2 weeks of April. We still have 2 more weeks to go.

Do you feel like you have missed out on the opportunities in the market this year ?
Would you like to learn How to Outperform the market with Growth Stocks investing?

My schedule has been full for the last 2 months but if you are really interested in enrolling in our mentoring program, I will be glad to open up some slots for you.

Schedule a FREE 30 minutes of "Discovery Call" with us and learn my profitable system of trading and investing in Growth Stocks.