Crash Course on CANSLIM | CANSLIM Stock Trading System | Ross Haber - Fo...

 

Our Criteria for Selecting Growth Stocks

Almost 7 years ago we at  "Investorspotlight"  started on a journey to empower Retail traders and investors to take control of their financial future.  We developed a Mentoring/Coaching program to take the mystery out of trading and investing in the stock market.  We got involved with the IBD (Investors Business Daily) Meetup group in the local Tampa Bay area to share our methodology with the local investors and traders.  In the process we learnt and solidified our own understandings of the IBD CANSLIM system.  Follow me on tweeter  @ "spotlightamin"  where I tweet daily on stocks of interest and stock market content that I find worth reading.    

Here is a short video that we developed 7 years ago to briefly highlight our minimum criteria for selecting Growth Stocks and establishing loss and profit targets for each of the stocks we take a position on.  We have fine tuned our system over the last several years but our foundation is highlighted in this short video.  We are hoping you will review it and comment on it and give us the feed back.  We hope you benefit from our expertise and over 25 years that we have spent trading and investing in Growth Stocks.

Passcode : spot0816 to view the video

Building a Watchlist and Planning a Trade -

Happy Trading

Amin (investorspotlight@gmail.com) 

Master the CANSLIM Strategy

C A N S L I M

Investors Business Daily (IBD) system of investing and trading growth stocks can result in attaning gains of 2 to 2 and 1/2 times better than the general market - utilizing the performance of the  $SPY  as a proxy for the performance of the general market.  Here is an excellent video by Richard Moglen who goes into the details of the highlights of IBD system of trading growth stocks.  

Review it on a regular basis to keep you grounded to the system.  We have been in a bullish trend since February of 2016 with minor pull backs of 3% to 8%  along the way.  That is perfectly normal and something every growth stock investors looks for.  Minor corrections helps shake out the weak holders of stocks.  It also helps set up new bases for stocks to take a breather and set up for the next move higher.  

August and September months are traditionally some of our  weakest months in the market.  It's hard to make progress with your portfolio when the market is volatile as it has been for the last couple of weeks.  Don't be dismayed though.  Observe the strict rules of mitigating risk and dispose of stocks that are not making much progress.  It's best to conserve  CASH   right now and harvest partial profits in stocks that have attained gains of  +20%  to  +25%.   Our best months in the market tends to be between November through April.  History suggests that if the market is up the first 6 months of the year, than the latter 1/2 of the year will also have a positive performance.  Have the  CASH  available in your account to take the advantage of rally in the Fall.

Happy Trading !

Amin

 Growth Stock Investing

IBD (Investors Business Daily) system of investing and trading growth stocks is one of the best ways to double your portfolio.  IBD studies has shown that adhering to their CANSLIM system, one can attain gains of 2 to 2 and 1/2 times than what one would attain investing in the general market using $SPY as a proxy of the performance of the general market.  It's a system that one can learn and master.  It requires discipline and following the the rules of the system.  

Market is currently in a  'Confirmed Uptrend'.  Although the coast is clear for making additional buys on your existing stocks or to initiate new positions right now, just be aware that the market is not making much progress right now.  Personally I started migrating to  CASH  over 6 weeks ago.  Although the major indexes - $SPY  and the  $QQQ  are trading above the 21 day ema(exponential moving average), they are pretty much extended from the 50 day sma(simple moving average).  Market retracing -5% to -10%  with low volume trading during the summer months of August and September would be quite normal.  This is not a prediction but we know these are some of the poor performing months in the market traditionally.  Let the stock charts tell you the story and let the data drive your decisions.

This is probably a good time for us all to polish up our skills of trading, review our past trades to see where we made mistakes and learn from it.  Learn to decipher stock charts and master the skills of identifying the ideal buy and sell signals that stock charts flash at you.  Currently IBD is offering huge discounts on their Home Study courses.  I have taken several of those courses over the years - and some of them I attended several times when they were presented live.  I would strongly recommend the following online courses to start your mastery of the IBD system.  Having an IBD subscription is a good start and these courses will certainly speed up your learning curve.  I know it certainly did that for me and I continue to look over my notes and the booklet they provided on a regular basis to keep me grounded to the system. 

IBD Digital Home Study Courses:

Level 1 ... $299 (50% off now for $149)

Level 2 ... $799 (30% off now for $549)

Level 3 ... $999 (30% off now for $695)

For less than $1,400 (1/3 off from $2097) you can build a starting library to learn the IBD system of Growth Stock Investing. 

Level 1 Video

Ken Shreve - author at IBD used to teach level 1 course live on a regular basis.  Currently he appears regularly on IBD live discussing stocks of interest during the first hour of the market.  He also appears regularly during the daily IBD segment of end of the day market analysis.  Here is a link to the short video he produced highlighting the Level 1 course.  One needs to master deciphering the bases that all stocks go through before they make their bid higher.

https://youtu.be/UiYSRX-AKBU

Good luck trading this week.

Amin

 $GNRC

This is an institutional quality stock that has been appearing on IBD 50 screen for the past year.  It used to be a stock ranging in price between $50 and $60 just 2 years ago and trading less than 500,000 shares per day (less than $60 million ... share price x volume of shares traded per day).  Most institutions prefer to trade stocks that trade $100 million or more per day.  They prefer very liquid stocks because not only do they have deep pockets to acquire several billions of $$$ in their stocks of choice but also because very liquid stocks offer them the opportunity to trade very liquid options on the stock.

During the week of February 10th 2020, the stock shot up in price by +10% within 4 days of heavy trading volume.  Over $2.5 billion of trading occurred within 4 days with trading volume that had shot up by 15 times the daily average trading volume on February 12th.  This ought to get any traders attention when one notices such a huge spike in the sheer volume of shares exchanging hands.  Within 3 months (end of June) the stock had moved up from $117 to $193 (+65% move).  This stock immediately got on my radar and kept it on my watch list.  Patience is the key.  It takes a lot of time for the stock to digest these massive  gains.  Institutions normally take a breather after making such a huge run in price.

Here is a short synopsis of How I handled this stock to profit handsomely utilizing the basic IBD (Investors Business Daily) rules that Mr. William J O'Neil practices.

1. Oct 28 2020 ... Stock breaks out from its consolidation of 208.26 as a pivot identified on my chart.
2. Oct 30th 2020 ... Established an initial position @ $213.99 (It's + 110% as of Friday July 23rd)
3. Nov 12th 2020 ... Added additional position @ $224.30 (It's +100% as of Friday July 23rd)
4. Feb 11th 2021 ... Stock breaks out from $287.55 as a pivot identified on my chart.  It rises +20% within days - triggering the "8 Week Hold Rule".  This is a confirmation and a sign that the institutions are deeply committed to acquiring this stock.  
5. Identified $330.31 as a support/resistance area on my trading platform to alert me.
6. Stock consolidated for 3 months - Mar/Apr/May - to digest the gains of +300%  since its initial run from Feb 2020.  Several small positions were added between $300 and $325 to concentrate the portfolio to just a few leading stocks.
7. June 8th 2021 ... Stock breaks out from  $331.31 in volume of 3 times the average trading volume of the stock.  One can see the 8 day ema(exponential moving average) separating away from the 21 day ema and the stock making its run higher.  It never looked back.  The stock never corrected much while the market went into correction a week before.
8. Currently the stock is hovering around $440 identified as a 3 weeks flat base on my platform.  Earnings is due this week.  The last few additions to stock positions (additions made from $300 to $325)  were closed down for +40% profits.  
9. Stock is currently extended from its 50 day sma (simple moving average).  There is a lot of  "White Space"  between the 8 day ema and the 50 day ema.  Similar situation occurred on Feb 22nd when the stock made a gain of over +20% and triggered the "8 week Hold Rule".  History of the stock indicates that the stock tends to consolidate its gains after such a massive move.

Stock will be evaluated after the earnings are reported later this week.  It would be best for the stock to consolidate and form a new base from which to propel higher.  I am looking for the 50 day sma to catch up to the 21 day ema and fill up that space closer to the 21 day ema.

I hope this post helps you in identifying the leading stocks utilizing the IBD screens effectively.  Building a good stock watch list and annotating your stock charts would help you to track stocks that are of institutional quality.  Mitigating risk by harvesting profits prior to earnings is a good strategy to follow as well.  Patience is the key when you are monitoring stocks that are on your watch list.  Success of profiting in a leading stock is all about waiting for the right set up to increase the odds of a successful and a profitable trade.

Happy Trading this week.

Market tone has been updated by IBD to  "Market in Confirmed Uptrend".  It's a sign to start rebuilding your portfolio with new leading stocks or adding to the existing stocks in your portfolio with additional buys.  

Amin (investorspotlight@gmail.com)  

 Timing  the  Market

YES ... You can TIME the market

"Learn to always sell stock quickly when you have a small loss rather than waiting and hoping they'll come back"

By William J O'neil (Founder of Investors Business daily

Market has been treading water for the last 3 weeks and finally this week it exhibited major signs of stress.  $SPY  ( general market performance) as well as the  $QQQ (growth stock performance) seems to have topped out on July 14th and is now headed down towards the 50 day sma (simple moving average).  IBD (Investors Business Daily) changed the tone of the market down a notch to  "Market Under Pressure"  as of Friday July 16th close of session.  That is our first signal to:

• REDUCE exposure in the market and conserve CASH
• Harvest partial profits in stocks that have attained gains of +20  to +25%  or higher
• Close out losing positions or positions that you added to existing positions that are  showing losses.
• SELL  into strength - partial position - in stocks that are rising above the 8 day ema (exponential moving average)

If you are following the IBD style of investing in Growth Stocks and want to Out Perform the general market utilizing the performance of  $SPY  -  proxy for general market performance - it's critical to control your losses  NOW  when the market is not going anywhere and heading lower.  Market will once again provide you with the opportunity to invest in new and up coming leaders and you want to have the   CASH  available and ready to invest once the market rights itself.

Recent  History

One of the visual indication that I often look for on daily stock charts is the distance between the 8 day ema and the 50 sma.  I often call it the   'White Space'.  Those of you that attended my monthly IBD Meetup sessions in the Tampa Bay area, I often used to show this white space on stock charts and charts of the 2 indices ($SPY and $QQQ)  to highlight when they are extended.  During the last 5 recent corrections in the stock market that we went through, you will notice visually that there was a wide white space between these two moving averages.  We are at that juncture in the market at this time.  One should be prepared with the scenario that the market could very easily drop down to the 50 sma - a drop of -5% or more.  Utilizing recent history as a guide, this is what occurred during the last 4 brutal correction:

1.  Feb 19th 2020 ... -35%
2.  Sept 2nd 2020 ... -10%
3.  Feb 16th 2021 ... -11%
4.  Apr 29th 2021  ...  -9%

One would have to make up  +25%  gains on a stock that loses  -20%.  It's an uphill battle and the way to increase the size of portfolio is to mitigate the losses and conserve  CASH.  Personally I have been gradually reducing my positions as of 3 weeks ago and reduced the number of stock/etf's from 12 down to just 6.  

"Treat your stock positions as your employees.  You would fire the ones  that do not perform for you.  You will retain the ones that do perform for you."

It seems brutal but than again this is your hard earned money that you are putting at risk in the market.  The way to increase the size of your portfolio is to minimize losses and be out of the market when conditions are not favourable.  Aggressively pursue the market when IBD changes its tone of the market to  "Confirmed Uptrend".  You have to have the  CASH  available when the market conditions become favourable for you.

Happy Trading!

Amin (investorspotlight@gmail.com)

https://youtu.be/yNiWviKEoa8

Portfolio  Management 

"When they came on the scene, Kmart was one of them, when in 1962 it only averaged about 2,000 shares traded each day. Jack Eckerd was another, which in April 1967 also averaged just 2,000 shares of trading each day. Both of these stocks went on to become huge winners. Even though the institutions at first would not pick up Pic'N Save, O'Neil did for his own personal account. He actually kept purchasing this stock on the way up, buying more shares every one or two points when the stock would rise. He did this for several years. In fact, he made 285 different buys on this stock in a span of 7 n 1/2 years. This is probably one of the most masterful examples ever of how to pyramid a winning position. At one point he actually owned 4.99% of the total stock outstanding (if you own more than 5%, you must register with the SEC). This stock would turn out to be one of his biggest winners ever, with some of his initial positions up 20 fold when he finally sold out and his profits were a main source for starting the newspaper Investors's Business Daily a few years later".

Mr. John Boik, the author of his book:

"How Legendary Traders made Millions"

tweeted this passage from page 148 of his book in June of 2020.  I shared this excellent content on my tweeter account:  "@spotlightamin"  for the benefit of retail traders and investors.  I would highly recommend that you pick up a copy of this book for your library.  He highlights some of the principles that some of the greatest and most profitable traders utilize to accumulate a 7 figure portfolio.

One of the best books that I personally keep a copy by my bedside table and the book that I carry with me every time I travel or go on vacation is:

How  to  make  Money  in  Stocks (4th Edition)

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

The first chapter from page 9 through page 109 are highlighted with charts of the the greatest winning stocks.  Every winning stock ever since the stock market came into being exhibit these characteristics.  There is no secret to picking the right winning stock if you learn to study the stock charts and all the hidden clues it exhibits.  Professional money managers don't want to share these secrets to individual retail traders and would much prefer that you buy what they have to sell - mutual funds and index funds.  Here is the link that describes the IBD (Investors Business Daily) system as practiced by its founder Mr. William J O'Neil.

https://youtu.be/66XFXqh_5N4

Currently 2 of my largest stock positions is in  $RH  (my blog post of Oct 22 2020)  and  $PYPL.  Both of these positions were originated during the  'Follow Thru'   day on April 6th ($PYPL at $97.80 that is  +300%  currently)  and on April 7th ($RH  at $110.56 that is  +600%  currently).  Multiple positions were established in a stair step manner as the stock kept climbing.  Both of these stocks have appeared numerous times in some of the most powerful screens of IBD weekly print and digital version since January 2019.  The key to making sizable gains in your portfolio is to concentrate your portfolio to just a handful of stocks.  It seems counterintuitive but when you put into practice the rules laid out by IBD, it makes perfect sense. 

Mentoring/Coaching  Program

I have had a lot of my readers express an interest in getting up to speed with learning about Growth Stock Investing and trading.  We will be offering for the first time ever live weekly Zoom sessions for 8 weeks in a row tentatively starting Tuesday  August 31st,  2021.  Sessions will be offered at 6.00 pm (Eastern Standard Time) that will last 60 to 70 minutes.  There will be home work assigned at the end of every session to help every participant put immediately into practice the discipline of Growth Stock investing.  I shall share my screens so that you can:

1. Look over my shoulder every week as I go through the process of looking for stocks of interest.

1. Analyzing the stock charts to decipher the institutional behaviour.

1.  Annotate stock charts on the brokerage platform for future reference.

1. Going through the Investors.com website to extract some fundamental and technical aspects of the stock.

1. Developing an appropriate Trade Plan for the stock.

1. How to position size when you take an initial stock position or add to the existing position.

It will be 2 month (8 sessions) subscription service with a blog post weekly to help keep the subscribers abreast of the stocks discussed and lessons to learn from the home work assignment.  After the first 4 sessions of learning some of the key parts of the Growth Stock investment strategy, subscribers will have the opportunity to present Growth Stocks of interest from their homework assignments every week that they would like for me to highlight during follow up sessions to solidify the rules of investing.
Class size will be limited to few students  to enhance the experience of active engagement with homework assignments.  Sessions will be recorded and archived  and will be made available as a reference guide.
if you would like to participate in this subscription service and start your profitable investing journey with my guidance and mentoring, contact me at:

investorspotlight@gmail.com

You must be a subscriber to IBD digital/print to attain the most benefit from this mentoring session.  It will require a couple of hours of study every week to solidify your learning of the principles of Growth Stock Investing.  November through April are the strongest months in the stock market.  Invest the time now to master this technique to attain financial freedom. 

Happy Trading!
Amin Hemani

Super   Stocks

Professional money managers that handle hedge funds, mutual funds and pension funds are the ones responsible for the rise in the price of a stock.  When they decide to take a position in a given stock, it usually takes them several weeks of consistent buying to accumulate the total position they are trying to attain.  It's very hard for them to hide their intentions.  Once you learn to decipher the daily, weekly and monthly stock charts of the stock, it becomes very apparent how some of these stocks attain gains of 400% to 2,000% within a few years.  

2015 was the year when market was going through a consolidation period.  Our new bull market began taking a hold by June of 2016.   $QQQ   the growth stock index I monitor is +350% since that time.  Some of the big cap growth stocks that we hear about that have out performed the  $QQQ  such as, $AAPL (+700%),  $AMZN (+500%), $CMG (+400%),  $GOOGL (+400%), $MSFT (+500%)  and  $NFLX (+500%), all started their huge run and displayed some of the very common characteristics of what I consider  SUPER STOCKS.  Some of the  common traits that I have noticed studying such stocks are: 

1. They are not cheap stocks when they start their initial run.  Institutions don't buy cheap stocks since they have to buy millions of shares to accumulate their full position.
2. These stocks quite often gap up in price because of the sheer demand from all the institutions that want to accumulate them.
3. You will often notice that the stock will attain gains of +20% or more within a week or three during earnings report and consolidate these gains before making another attempt to attain a higher price.

According to IBD (Investors Business Daily) principles of investing as preached by the founder of IBD  Mr. William J O'Neil, the way to make big money in the stock market is to concentrate your portfolio to a handful of stocks and not hold more than 8 to 10 stocks with a $million portfolio.  Every week end I look over one of my stock watch list that high lights stocks that have gapped up or are showing huge spikes in volume of shares changing hands during its initial run.  

Stock  Watch  List

Here is a list of stocks that the institutions have indicated an interest in during the last several months.  Some of them rose  +20%  or more within 3 weeks and triggered the "8 Week Hold Rule".  I have indicated in parenthesis support and resistance area that the stock may retrace to or build a base to propel higher.

1. $ASO    ...   (41.74)
2. $BEAM   ... (94.60)
3. $BNTX    ... (219.94)
4. $CELH   ...  (70.66)
5. $CERE    ... (18.14)
6. $CRNC    ... (120)
7. $CROX    ... (109.39)
8. $DECK     ... (353.70)
9. $FIGS       ... (42.89)
10. $GNRC    ... (363.57) Currently have several positions average position price $319.71
11. $IT            ... (235.55)
12. $NKE        ... (146.82)
13. $NTLA      ... (92.0)
14. $SWBI      ... (23.57)
15. $TDC        ... (47.68)
16. $TTD        ... (72.53)
17. $TIGR       ... (26.20)

We are heading into the worst performing 3rd quarter of the year.  As a general rule of thumb to follow with growth stocks, its always a good idea to trim your position once the stock makes a gain of +20 to 25%.  Within 2 weeks we will embark upon the earnings reports for the 2nd quarter.  Stocks become very volatile from earnings report and its a good idea to  trim some of your holdings to avoid a nasty surprise of a gap down in price.  Don't ever let a sizable profit to turn into a loss.  You have worked very hard to attain profits in a stock and the common mistake most traders make is holding onto the full position in a stock during earnings report.

Happy Trading!

Amin

 GROWTH  Stock  Investing

Lesson 1: Penny Stocks Will Ruin You

Yesterday I came across a post  that I thought was quite insightful and well written.  What really jumped out at me was the opinion of penny stocks because it's one that resonates with me.  There are lots of ways to make money investing but I am convinced that penny stocks will never get me to my financial goals.  I prefer to manage my risk by working only with true growth stocks.  The sooner you learn to steer clear of penny stocks the better as far as I'm concerned.  Personally I prefer to be involved with stocks that are priced above $40.  $100 or higher is preferable - especially with average daily trading volume of 500,000 shared per day or higher.  These are institutional types of stocks and I prefer to fish where the big boys in the market are fishing at.

Lesson 2: Know Your Trading 

Personality

In my role as a Meetup coordinator for IBD (Investors Business Daily) and as a mentor to new traders for the last 7 years, I am constantly exposed to people who employ all kinds of different investing methods.  For the last 25 years I've thought of myself as an investor but recently it occurred to me that I've actually become a trader.  If you're wondering what the difference is, it really boils down to your time frame. 

I simply don't have the stomach to sustain the types of double digit losses that investors might see over the life of their positions.  Also, I don't have the patience to sit in a position for more than 8 weeks at a time so long term involvement doesn't really interest me.  Knowing that, I've committed myself to planning all of my positions from the perspectives of a trader instead of as an investor.  However, if the stock makes a substantial gain (+20% to +25%) within 8 weeks, I will take partial profits and allow the rest of the position to consolidate and stair step additional when the stock moves to higher ground.

Lesson 3: Have A Process

My trading process has been methodically put together through years of classroom training as well as trial and error.  I am a Growth Stock trader and the core system I follow is the IBD style of investing in Growth Stocks.  Concentrate my portfolio to just a handful of stocks/etf's  and limit my exposure to no more than 12 to 15 stocks when the market has a  "Follow Thru Day."  Within a short period of time, I quickly identify the true market leaders that are out performing the general market.  Put more money to work to the ones that are helping me build my portfolio and trim back the ones that are not advancing as fast or worse - are losing money.  According to IBD, most retail traders with a portfolio size that is no more than a $million in size ought to have just 8 to 12 stocks.

No matter what process you decide to use, it's only going to work if you stick with it.  The moment you start to stray or take liberties, you've increased your risk along with your chances of losing money.

Lesson 4: Follow Rules

IBD has several Buy Rules and Sell Rules.  As a retail trader, it's critical to follow these rules because they are proven rules that Mr William J O'neil (Founder of Investors Business Daily) published in his book:

How to Make Money in Stocks

I keep a copy of his book in my office and by my bedside for a quick reference.

Infact I take this book with me when I travel or when I go on vacation or a cruise.

He wrote these rules to help him navigate the market and mitigate risk.  Master these proven rules and do not deviate from its true concept.  Mitigate risk by cutting losses to no more than 7% to 8% from its entry on every stock that you initiate a position on - no exceptions for someone starting out.  Most retail traders will never make much of a progress with their portfolio if they don't minimize their losses.  Psychologically it destroys your confidence everytime you open up your brokers platform and see that losing stock position stabbing at you. 

Happy Trading!

Amin Hemani (investorspotlight@gmail.com) 

 

Institution Stocks of Interest

IBD (Investors Business Daily) has an  '8 Weeks Hold Rule'  for stocks that show strong institutional demand.  The rule suggests that if the stock attains a  +20%  gain or higher from its proper buy point in less than 3 weeks, one should hold it for 8 weeks and evaluate the stock at that point.  Mr. William J. O'Neil (founder of IBD) found that quite often such stocks continue to make higher gains after attaining the explosive gains of over  +20%  within a short period of time.  Demand from the institutions is so great that the stock gets propelled higher from the sheer size of the demand from the institutions.  Institutions often curb their enthusiasm for the stock after attaining high price so quickly just so as not to exhibit their intentions of wanting to acquire more of the stock.  

Quite often stocks tend to gap up during the quarterly earnings report.  There is a rush from the institutions to capture as many shares as possible.  Their competing interest is reflected in the rise in the price of the stock.  During earnings season, every quarter I scan for stocks that increase in price in volume of shares traded 2 or more times than the average daily volume.  Institutions immediately within days hold back their interest after acquiring their initial position.  Retail traders often get excited and think that the stock will keep going higher and higher.  Other retail traders often get greedy and start chasing the stock only to find out that the stock begins to retrace down from the 8 day sma (simple average) to 21 day sma.  Patience is the key.  Make a list of such stocks that gap up and watch its performance over the next 8 weeks for a possible entry.

$QFIN

This stock has been appearing on IBD's one of the most powerful screens - IBD 50 Stock list - for the last couple of weeks.  It also has appeared regularly on the Sector Leaders Screen as well.  This  raises my rabbit ears for clues of institutional interest in the stock.  Here is a quick recap of how one could have taken advantage of the clues left by the institutions exhibiting an interest in accumulating this stock. 

• Feb 1st of 2021, stock broke out from 18.38 buy point in volume of shares traded 3 times the daily average volume.  Within 6 days, the stock rose more than  +20%  and within 2 weeks the stock attained gains of  +71.38%.  This triggered the  '8 week Hole Rule'.  Stock never looked back for the next 8 weeks 
• One of the IBD sell rules is to lock in some partial profits once the stock attains gains of  +20%  to  +25%.  Stocks quite often take some time to digest the massive gains attained in a short period of time.  It's good that the stock builds another base from which to propel higher.  This provides one an opportunity to profit in the stock if one missed getting in on Feb 1st.
• Earnings was on May 27th.  Stock once again broke out at 28.51 the day after the earnings release in trading volume that was 5 times the normal average trading volume.  Once again the institutions have expressed an interest in acquiring the stock and scaling up their position in the stock.
• May 28th the next day, stock could have been purchased at its early buy point of 28.51.  
• Friday June 4th, the stock broke out from its traditional buy point of 35.25 in volume that was 3 times the daily average trading volume.
• Within one week, the stock has attained gains of  +28.27%.  
• Stock is currently extended and trading at its 8 day ema (exponential moving average).  It's would be quite normal for it to retrace closer to the 21 day sma  to provide one an entry closer to the break out buy point.
• Stock is  +100%  since its breakout on Feb 1st (4 months).

 Subscription Service

We are putting our final touch to launch our Weekly Zoom Sessions.  If it all works out well than we hope to have it start by late summer.  August and September are our worst performing months.  It makes perfect sense to get trained to the finer points of trading and investing in Growth Stocks while the market is in doldrum for the summer.  I am looking forward to have you all:

1. Look over my shoulder every week as I go through the process of looking for stocks of interest.
2. Analyzing the stock charts to decipher the institutional behaviour.
3. How to Annotate stock charts on the brokerage platform for future reference.
4. Going through the Investors.com website to extract some fundamental and technical aspects of the stock.
5. Developing an appropriate Trade Plan for the stock.
6. How to position size when you take an initial stock position or add to the existing position.
7. Look over some of the conservative option setup to consider to either protect your stock or to increase the profitability for slight moves in the stock.

Class size will be limited to few students  to enhance the experience of active engagement with homework assignments.  Secure your spot now by letting me know if you are interested in being a subscriber.   Sessions will be recorded and archived  and will be available for as long as you are a subscriber.   

Send me an email at: 

investorspotlight@gmail.com 

if you would like to participate in this subscription service and start your profitable investing journey with my guidance and mentoring.

Happy Trading!

Amin Hemani

Growth Stock Investing 

"I cannot do a superior research than these big boys.  But I can see what the big boys do with the research in the way they buy and sell stocks.  I see plainly on the index and individual stock's price and volume action.  That to me is all the information that is needed.  I just follow the big money.  But to get to that point, I spent years learning.  It is only the large gains I have made that has confirmed what all top speculators know.  It is all in the price and volume action.  And the rest of the stuff in the market is pure fluff" 

By Brad Koteshwar

Author of  'The Perfect Speculator'

 

How to Succeed at Growth Stock Investing

   

It is one of the great paradoxes of the stock market that what seems too high usually goes higher and what seems too low usually goes lower.

William O'Neil (Founder of Investors Business Daily)

In order to attain out size gains in the market utilizing the IBD (Investors Business Daily) principles one must:

• Buy High and sell Higher.
• Scan for stocks that are the leading stocks in the leading sector.
• Buy stocks that have an RS ratings of 90 and higher.
• RS line on IBD stock charts that are pointing up and between 12 and 3 on a clock.
• RS line attaining all time high.  It's even better if the RS line is attaining an all time high before the price does.
• Concentrate portfolio to just a few leading stocks and do not diversify.
• Have the discipline and a routine every weekend to review 100 to 150 stocks that are leading the market.  Annotate as many charts as you can with buy points.
• Develop a daily routine before the market opens and after the market closes to review the portfolio and trade plan for every stock position taken.
• Follow the rules of cutting losses with every stock.
• Do not buy cheap stocks or stocks that have a daily trading volume of less than 500,000 shares.

Mentoring Program

If you are seriously considering getting up to speed with learning about Growth Stock Investing and trading, Zoom weekly live Meetup session may be one of the best ways for you to:

1. Look over my shoulder every week as I go through the process of looking for stocks of interest.
2. Analyzing the stock charts to decipher the institutional behaviour.
3. How to Annotate stock charts on the brokerage platform for future reference.
4. Going through the Investors.com website to extract some fundamental and technical aspects of the stock.
5. Developing an appropriate Trade Plan for the stock.
6. How to position size when you take an initial stock position or add to the existing position.
7. Look over some of the conservative option setup to consider to either protect your stock or to increase the profitability for slight moves in the stock.

It will be a monthly subscription based service with a blog post weekly to help keep the subscribers abreast of the stock positions taken.  Subscribers will have the opportunity to present Growth Stocks of interest every week that they would like for me to highlight. 

Class size will be limited to few students  to enhance the experience of active engagement with homework assignments.  Currently I am soliciting prospective students that could benefit from this start up Live Zoom Sessions starting in mid summer season.  Sessions will be recorded and archived  and will be available as long as you are a subscriber.  Launch date would be in mid July.  

Send me an email at: 

investorspotlight@gmail.com 

if you would like to participate in this subscription service and start your profitable investing journey with my guidance and mentoring.

Happy Trading!

Amin Hemani

Simple    Moving    Average    Lines

"We've all heard the saying, 'timing is everything'. This is just as true in the stock market as it is in life. Knowing the optimal time to buy or sell a stock is a valuable skill anyone can and should learn" 

By Willian J O'Neil (Founder of Investors Business Daily)

Simple moving average (sma) lines are very simple tools to use for taking a position in a stock but also to exit a position for profit as well as exiting the position to mitigate loss.  Institutions account for more than 70% of the trading volume in the stock market.  Ultimately it is them that determine what the stock price is going to be.  If they  decide to enter a stock position, it may take them several weeks to accumulate the entire position.  Stocks will show that by having the price of the stock staying close to the faster moving 10 day and 21 day sma.  Conversely, if they decide to exit the position, it will show up as high volume of stock trading and the price will begin to get depressed lower.  It will show up as the  faster 10 day and the 21 day sma heading lower towards the  slower moving 50 day sma.


50 day moving average line is one of the most closely watched lines by the institutional investors.  Once the stock approaches this line after trading above the 21 day sma, retail investors ought to pay attention to see if the stock gets supported by the institutions at this level.  Institutional buyers will come in with huge volume buying to pick up these shares when they are committed to the stock.  One of the clues to look for during  'distribution days'  is to determine if your stock is being supported or disposed of by the institutions.  If your stock is supported and it bounces off the 50 day sma in volume considerably higher than the average daily trading volume, one might want to consider initiating a new position or adding on a second position in the stock.

$RH  Scaling Up

Scaling up the stock position and concentrating your portfolio to just a few leading stocks is the key to Out Performing the general market.  Most retail traders that have a portfolio size of $100,000 to $1,000,000 probably should not have any more than 5 to 8 positions.  It's ok to start out with a few more positions when the market has a  'Follow Thru'  day but within 2 weeks or so, one should immediately identify the ones that have the strength to ride above the 21 day sma(simple moving average).  Close out the positions that are lagging and force feed the $$$ from them to the ones that are propelling higher.  It takes a lot of skill to master this technique.  Mr Willam J O'Neil  has demonstrated this and he quite often had a heavily concentrated position in just 1 stock.  He accomplished this by adding to his original position several times along the way as the stock continued to show strength.  

$RH  was the stock of my choice when we had a  'Follow Thru'  day on April 8th 2020.  Total of 18 positions were initiated to date.  Following is the performance of each position as of May 21st 2021 (58 weeks):

1. 4/8 ... 110.56 (548%) Largest initial position
2. 6/8 ... 250.00 (242%) 2nd largest position
3. 7/1 ... 250.00 (242%) small addition
4. 8/26 ... 320.00 (189%) very small addition
5. 10/5 ... 375.00 (162%) smaller addition
6. 11/6 ... 387.50 (157%) smaller position
7. 11/13 ... 397.00 (153%) scaling in with fewer n fewer shares
8. 12/11 ... 433.15 (140%) adding a few more shares and not raise the average cost substantially
9. 1/25 ... 489.88 (124%) very small addition
10. 1/25 ... 499.00 (121%) added a few cause stock was acting very well
11. 2/12 ... 488.76 (124%) added a few with a tight base consolidation
12. 2/16 ... 483.02 (125%) added a few with a tight base consolidation
13. 2/17 ... 476.51 (127%) added a few stock as stock is consolidating
14. 2/24 ... 508.98 (119%) added a few as stock is trading along the 8 day sma (sign of strength)
15. 2/25 ... 495.86 (122%) added a few since stock is holding up while  $QQQ  has been correcting
16. 5/19 ... 617.03 (-0.20%) added small amount since stock bounced off the 50 day sma
17. 5/20 ... 609.66 (-2%) added small amount since stock hovering at 50 day sma
18. 5/21 ... 606.98 (-0.17%) added a small amount since stock is held up at 50 day sma

Mentoring Program

If you are seriously considering getting up to speed with learning about Growth Stock Investing and trading, Zoom weekly live Meetup session may be one of the best ways for you to:

1. Look over my shoulder every week as I go through the process of looking for stocks of interest.
2. Analysing the stock charts to decipher the institutional behaviour.
3. How to Annotate stock charts on the brokerage platform for future reference.
4. Going through the Investors.com website to extract some fundamental and technical aspects of the stock.
5. Developing an appropriate Trade Plan for the stock.
6. How to position size when you take an initial stock position or add to the existing position.
7. Look over some of the conservative option setup to consider to either protect your stock or to increase the profitabilty for slight moves in the stock.

It will be a monthly subscription based service with a blog post weekly to help keep the subscribers abreast of the stock positions taken.  Subscribers will have the opportunity to present Growth Stocks of interest every week that they would like for me to highlight. 

Class size will be limited to few students  to enhance the experience of active engagement with homework assignments.  Currently I am soliciting prospective students that could benefit from this start up Live Zoom Sessions starting in mid summer season.  Sessions will be recorded and archived  and will be available as long as you are a subscriber.  Launch date would be in mid July.  

Send me an email at: 

investorspotlight@gmail.com 

if you would like to participate in this subscription service and start your profitable investing journey with my guidance and mentoring.

Happy Trading!

Amin Hemani

Monitor  and  Respect  50  day/200 day  Simple  Moving  Average  Lines

Institutions account for over 75% of the total daily trading volume in the US stock market.  Most of the institutional trading occurs with algorithmic trading by computers.  These computers are programmed to scale up or scale down gradually with their stock purchases.  We as retail traders and investors do not have these tools to work with.  Our advantage lies in being very nimble.  We can get in and get out of the market faster than the institutions can.  This does require a lot of discipline and holding our emotions in check.  Being data driven is the key to preserving your portfolio and profiting in the market.  Institutions can not hide their purchases or disposition of stocks.  It shows up as either buying volume with the price escalating or selling volume with the price depressing. 

One of the simplest indicator that I teach my students is the 50 day and a 200 day (sma) simple moving averages plotted on any stock or index charts.  Institutions support the Growth Stocks that they are interested in when it touches the 50 day sma(simple moving average).  That is also the ideal time for us as retail investors to scale up with our purchases to be in synch with the institutions.  Same holds true if the stock or index plummets down the 50 day sma.  That is also the time for us as retail investors to scale down our positions.  This ought to be all figured out initially with a well thought out Trade Plan for the Stock.  It helps in keeping emotions in check and allows your trading system to take control instead. 

200 day sma is even more critical for us as retail traders.  That's the area that we don't want to be in as a Growth Stock investor.  Losses - capital as well as emotional - mount up and it becomes very difficult to recoup those losses.  Once the index or stock reaches that level, it can get even lower with institutions covering their short bets on stocks with options.  It is best to leave it up to the hedge funds that are    "Value Investors"    to prop up the stocks and the indexes.  For retail investors like us, the best approach is to be defensive and start migrating to  CASH  as the stock and the indexes begin to slice past the 50 day sma.   

Mentoring Program

If you are seriously considering getting up to speed with learning about Growth Stock Investing and trading, Zoom weekly live Meetup session may be one of the best ways for you to:

1. Look over my shoulder every week as I go through the process of looking for stocks of interest.
2. Analysing the stock charts to decipher the institutional behaviour.
3. How to Annotate stock charts on the brokerage platform for future reference.
4. Going through the Investors.com website to extract some fundamental and technical aspects of the stock.
5. Developing an appropriate Trade Plan for the stock.
6. How to position size when you take an initial stock position or add to the existing position.
7. Look over some of the conservative option setup to consider to either protect your stock or to increase the profitabilty for slight moves in the stock.

It will be a monthly subscription based service with a blog post weekly to help keep the subscribers abreast of the stock positions taken.  Subscribers will have the opportunity to present Growth Stocks of interest every week that they would like for me to highlight. 

Class size will be limited to few students to enhance the experience of active engagement with homework assignments.  Currently I am soliciting prospective students that could benefit from this start up Live Zoom Sessions starting in mid summer season.  Sessions will be recorded and archived  and will be available as long as you are a subscriber.

Send me an email at: 

investorspotlight@gmail.com 

if you would like to participate in this subscription service and start your profitable investing journey with my guidance and mentoring.

Happy Trading!

Amin Hemani

 

Fine Tune Your Stock Watch List

PHOTOGRAPH BY RYAN MCGUIRE 

Last week I shared my very strict criteria for building a Growth Stock Watch List. I shared my philosophy of how I analyze the markets every week looking over the performance of the $SPY (General Market Performance) and the $QQQ (Growth Stock Performance). I am only looking for 1 or 2 stocks to take a position. After all, one needs to have just a handful of stocks (5 to 10 maximum with portfolio size of a maximum $1,000,000) to Out Perform the general market. Concentrating your portfolio is the approach to take. We had a very successful rally on Thursday and Friday of last week. Market has resumed it's uptrend and now is the time to add to your profitable stocks that endured the correction during the last 6 weeks.

Let Data Drive Your Decision

Are you tempted when Cathie Wood (founder of Ark Invest) on CNBC is singing the praises of market sell off of Growth Stocks or perhaps your lawn and pool maintenance guys are telling you about their recent account set up with Robinhood platform and how they have made 100% returns on some of the meme stocks?  When it comes to stock watch list building, only focus on the data that you can verify. 

There will always be a fair amount of noise out there so you've got to learn which information you can tune out, and what you should actually be paying attention to.  I like to keep things simple and with as few moving parts as I can.  It helps keep me from getting dragged into the dreaded cycle of  analysis paralysis  that every stock trader fears.

Examine Market Conditions

I like to start by taking a look at the chart action of the 2 major indices - $SPY and $QQQ. Once I've gotten a clearer picture of the general market I then like to hone in on the 11 major sector ETF's to see which is showing the most life. If you aren't familiar with the sectors, they are:

1. XLK = Technology
2. XLV = Health care
3. XLI = Industrials
4. XLB = Materials
5. XLE = Energy
6. XLF = Financials
7. XLU = Utilities
8. XLY = Discretionary
9. XLP = Staples
10. XLC = Communication Services
11. XLRE = Real Estate

Now that I've got the best performing sector in hand, I want to look at just the top stocks in that sector. This is how I get an idea of where the momentum lies. For me, the Relative Strength is the key component in this stage of the process.

Have The Right Tools

Adding a stock to your watch list is only the first step, now comes the real work!  There are countless tools out there but since I focus only on  growth stocks,  my tool kit begins and ends with IBD (Investors Business Daily).  The true value of IBD® is the quality of the data they provide.  In addition to their full break down of the IBD 50 (Computer generated list of top stocks) along with their mini charts as well as their special stock screens and the Big Cap 20 list, their editorial section daily along with their end of the day market analyses video, sheds light on the news of the day as it relates to the markets.  

The reason IBD® is so critical for me is because they've combined the science of fundamentals and technical analysis with esoteric elements like momentum.  They've done all the leg work for me and I trust their proprietary ratings so it's a no-brainer as far as I'm concerned.  

I also like to cross reference my research with some other industry sources like Schaeffer's, Barron's, and Value Line.  My active tweeter account  @spotlightamin  is actually configured to instantly publish new content from these trusted sources and some of the people that I follow diligently throughout the day so have a look if you'd like a consolidated stream.  

This should give you a fair idea on getting through your initial prep work and building out your watch list with the lowest hanging fruit. 

Mentoring Program

If you are seriously considering getting up to speed with learning about Growth Stock Investing and trading, Zoom weekly live Meetup session may be one of the best ways for you to:

1. Look over my shoulder every week as I go through the process of looking for stocks of interest.
2. Analysing the stock charts to decipher the institutional behaviour.
3. How to Annotate stock charts on the brokerage platform for future reference.
4. Going through the Investors.com website to extract some fundamental and technical aspects of the stock.
5. Developing an appropriate Trade Plan for the stock.
6. How to position size when you take an initial stock position or add to the existing position.
7. Look over some of the conservative option setup to consider to either protect your stock or to increase the profitabilty for slight moves in the stock.

It will be a monthly subscription based service with a blog post weekly to help keep the subscribers abreast of the stock positions taken.  Subscribers will have the opportunity to present Growth Stocks of interest every week that they would like for me to highlight.

Send me an email at: 

investorspotlight@gmail.com 

if you would like to participate in this subscription service.  Class size will be limited to allow for everyone to fully participate in the discussion of the stocks.

Happy Trading!

Amin Hemani