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Daily Stock Picks
Stock Picks for Monday, Oct 27, 2003:
ACF CSTR CNX DE BTUSCHN SHW SPRT WWCA
Stock Scan Criteria
The Stock Picks scan is based on the following criteria:- All US equities that closed above $5 and whose average daily volume is greater than 20,000 shares.
- The stock has made a recent pull-back in a longer term rising trend.
- Both price and volume have begun to rise.
Tips on Improving Performance
The theory behind the scan is fairly straight forward. We want to be buyers of those stocks that are in a rising trend and appear to be rebounding after a short pull-back. In other words, we want to buy the leading performers, not the laggards. But before buying any stock, it pays to due a little fundamental research. Here are a few suggestions that can help improve your overall results:- If you subscribe to Investors Business Daily or a similar service, use their stock evaluation model to narrow your picks. Consider buying those stocks with a rating of B or better.
- Use BigCharts or a similar service to check recent news about the stock that may effect it's near-term performance, i.e., upgrades/downgrades, earnings/guidance announcements, etc.
- Wait for the morning's first-hour rotation to settle out before buying. You can usually get a better entry price by waiting out the first hour of trading.
- Always use a trailing stop based on your individual risk tolerance. No matter how good a stock looks on paper, it can always go against you.
- Take profits when the 9-day stochastics line reaches +/-80% and turns lower or price makes two consecutive lower closes, whichever occurs first.
- Finally, pay attention to the general market trend (see our Basic Service Market Trend Indicator). According to IBD's William O'Neil, 60% of a stock's price movement can be attributable to the general market trend.