IBD Archive

  • When the market is in a correction, how do you know when that trend has changed and it’s time to buy stocks again? Wait for a “follow-through day.”

    Stock Market Bottoms

    When the market is in a correction, how do you know when that trend has changed and it’s time to buy stocks again? Wait for a “follow-through day.”

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  • When an uptrend eventually tops and the market begins to decline, it takes most stocks down with it. That’s why you must learn to spot the warning signs the market flashes when it begins to weaken and fall into a correction.

    Stock Market Tops

    When an uptrend eventually tops and the market begins to decline, it takes most stocks down with it. That’s why you must learn to spot the warning signs the market flashes when it begins to weaken and fall into a correction.

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  • When the major indexes are trending higher, most individual stocks will also move up. That’s why you want to make your buys while the market is in an uptrend. Also note that the strongest stocks tend to launch new price runs at the very beginning of a new uptrend.

    Action Plan for Handling Different Market Directions

    When the major indexes are trending higher, most individual stocks will also move up. That’s why you want to make your buys while the market is in an uptrend. Also note that the strongest stocks tend to launch new price runs at the very beginning of a new uptrend.

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  • History shows 3 out of 4 stocks move in the same direction as the overall market, either up or down. So if you buy stocks when the market is trending higher, you have a 75% chance of being right.

    How Market Direction Affects Your Portfolio

    History shows 3 out of 4 stocks move in the same direction as the overall market, either up or down. So if you buy stocks when the market is trending higher, you have a 75% chance of being right.

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  • You can have all the other six traits lined up, but if the overall market is in a downtrend, it will be very hard for even the best stocks to move higher. That’s because 3 of 4 stocks move in the same direction as the general market, either up or down.

    “M” – Market Direction (CAN SLIM)

    You can have all the other six traits lined up, but if the overall market is in a downtrend, it will be very hard for even the best stocks to move higher. That’s because 3 of 4 stocks move in the same direction as the general market, either up or down.

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  • “Institutional sponsorship” simply refers to ownership of a stock by mutual funds, banks, pension funds and other large institutions. These professional investors have teams of analysts researching thousands of stocks, so it’s good confirmation to see them buying a stock you’re considering. It’s even better to see the number of funds rising quarter over quarter, since it indicates increasing demand for the stock.

    “I” – Institutional Sponsorship (CAN SLIM)

    “Institutional sponsorship” simply refers to ownership of a stock by mutual funds, banks, pension funds and other large institutions. These professional investors have teams of analysts researching thousands of stocks, so it’s good confirmation to see them buying a stock you’re considering. It’s even better to see the number of funds rising quarter over quarter, since it indicates increasing demand for the stock.

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  • In the stock market, everything is relative. Institutional investors aren’t just looking for good stocks. They’re looking for the best of the best — those with the most explosive earnings and sales growth and the strongest game-changing new products.

    “L” – Leader or Laggard (CAN SLIM)

    In the stock market, everything is relative. Institutional investors aren’t just looking for good stocks. They’re looking for the best of the best — those with the most explosive earnings and sales growth and the strongest game-changing new products.

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  • If the share price rises sharply and the trading volume spikes well above average, that indicates demand. It means mutual fund managers and other institutional investors — who account for the bulk of all trading in the stock market — are aggressively buying shares.

    “S” – Supply and Demand (CAN SLIM)

    If the share price rises sharply and the trading volume spikes well above average, that indicates demand. It means mutual fund managers and other institutional investors — who account for the bulk of all trading in the stock market — are aggressively buying shares.

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  • The official mantra of the stock market could easily be “Out with the old, in with the new.” Wall Street is forward-looking, always searching for the next crop of companies with new, game-changing products and services.

    “N” – New Product or Service (CAN SLIM)

    The official mantra of the stock market could easily be “Out with the old, in with the new.” Wall Street is forward-looking, always searching for the next crop of companies with new, game-changing products and services.

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  • A company can cut costs or take other measures to boost earnings for a quarter or two. That can mask more serious underlying problems the company may be facing in terms of demand for its products, declining profit margins or negative industry trends. So make sure longer-term that annual earnings growth is also strong.

    “A” – Annual Earnings Growth (CAN SLIM)

    A company can cut costs or take other measures to boost earnings for a quarter or two. That can mask more serious underlying problems the company may be facing in terms of demand for its products, declining profit margins or negative industry trends. So make sure longer-term that annual earnings growth is also strong.

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