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

 

 Criteria for Building a Growth Stock Watch List

A lot of people have been asking me for an advice on how to better identify leading stocks and what exactly they should look for in a Growth Stock.  Market has been trending sideways for the last 3 weeks and stocks are building bases from which to propel higher.  Stocks usually gap up or plummet during earnings release and we are right in the middle of 1st quarter earnings release right now.  It's critical to have a ready stock watch list to act on when opportunities present themselves.  

In this post I will give a general overview of the philosophy I've put together that best meets my criteria as a very conservative trader and an investor.  There are over 10,000 stocks and etf's and I find it best to minimize my risk and look at only the leading stocks in the leading industry.  One needs to have just 5 to 8 stocks in their portfolio if one has a portfolio size ranging between $100,000 and $1,000,000.  One needs to concentrate their portfolio to just a handful of stocks to out perform the general market. 

Where  Do  I  Start? 

I like to picture my watch list stocks flowing downward through a funnel applying my filters along the way where only the best opportunities make it to the bottom.  In my mind, the top of the funnel focuses on the broadest aspects of the market so I like to review the chart action for the 2 major indices - the $SPY (General Market Performance) and the $QQQ (Growth Stock Performance) to give myself an idea of the general conditions I'm working with.  

After that, I move on to the next phase of my research where I focus on the 10 major sector ETF's.  My goal here is to determine which of the sectors is leading the way and has the most momentum action.  Once I have identified the best performing sector, I start looking at the top stocks within just that sector to help give myself some context.  At this point of my watch list preparation I'm reviewing charts with an eye towards the Relative Strength in order to get a clearer picture of a sectors general momentum. My aim is to identify only stocks that the institutions are exhibiting an interest in the current environment.

Eliminating  Variables

I view variables as barriers to action so now that I'm in the middle of my funnel, I've got to eliminate some to help me narrow things down. At this point I begin incorporating IBD® more heavily into my process. I'm looking for 10 specific things in a stock

1. Relative Strength must be at 87 or higher
2. EPS rating must be at 90 or higher
3. Composite ratings preferably 95 or higher
4. Volume traded per day must be a minimum of $60 million (price of shares x average daily volume of stocks traded)
5. IBD® accumulation distribution rating, B or higher
6. Up down volume must be at least 1.4
7. The stock must be in the top 40 group preferably
8. I look for a general trend that shows me an increase in price and an increase in volume of shares traded.
9. I review IBD® mini charts and make annotations on my brokerage platform charts for an earlier buy point and ideal buy point zone.
10. The stock must show increased sales and earnings in the last 2 quarters.

Building  The  Watch  List

Once I've applied the above criteria I can begin putting together a true actionable watch list.  My watch list criteria are very strict.  I may end up with as many as 10 stocks to my final list - if they fit my frame work - after reviewing over 150 to 200 stocks over the weekend.  However, I only take 1 or 2 positions at a time as a part of my trading philosophy.  At this point in my process, I need to select only the cream of the crop as my prime opportunity for taking a position.

To help me determine which stock gives me the best opportunity for profit I consider the following:

1. Is this stock moving up in relative strength.
2. Is this stock increasing in volume
3. Is this stock showing increased price
4. Is this stock approaching its resistance line
5. Is this stock approaching its buy point

.

Now I am at the bottom of the funnel.  Before initiating a stock position, establish a trade plan taking following into consideration:

• Identify a conservative profit target
• Establish a loss thresh hold
• Define my window of opportunity with a specified time frame.
• Decide on initial position size
• Have a plan in place to scale up in position at appropriate places as the stock makes a progress.

Growth  Stock  Coaching

I have been getting a lot of inquiries from my readers asking for a weekly session on  ZOOM  platform.  Lot of you enjoy and appreciate receiving my Stock Watch List that I post on my blog.  Some of you have asked if I could go over my stock watch list and share what I see in the stock charts.  I am giving it a lot of thought and would consider offering a Weekly 60 - 75 minute sessions to help you all with trading successfully and profitably.  It will be interactive and allow all participants to be actively engaged in the session.  Please give me your feed back and let me know:

1. What would you like to learn during a Zoom session?
2. What are your weaknesses with trading that you would like for me to help you polish up on?
3. Are you an IBD subscriber and for how long have you subscribed to it?
4. Would you like to be trained on some of the finer points to look for on IBD website?
5. What would you be willing to pay to get educated and become profitable from your Zoom session if such a coaching product would enhance your trading skills?  
6. Would Option strategies sessions on Growth Stocks be of an interest to you?

The more information you can provide me with your needs, the better I would be able to develop an appropriate Zoom sessions that will help meet your needs.

Happy Trading!

Amin Hemani 
investorspotlight@gmail.com