CheckListANDCheatSheets-5pages

7/30/2019 CheckListANDCheatSheets-5pages

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Composite Rating 80 or higher

EPS Rating of 80 or more

EPS growth 25% or higher in recent quarters

Accelerating earnings growthEPS growth past three years 25% or higher

Sales growth 25% or higher in the most recent quarter

ROE 17% or more

SMR Rating A or B

Among the top-rated stocks in its industry group

New products, service or management

IPO within the past 15 years

In the top 40-50 groups of IBD's 197 industriesGroup Relative Strength Rating of 80 or higher

CompanysFundamentals

Companys

Star Qualities

Industry

Group

NYSE + Nasdaq

Research Tables

Stock

Checkup

IBD

ChartsMarketSmith

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BuyingChecklist

Check the boxes to make sureyour stocks meet these criteria. Leaderboard

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Your Research Tools

2011 Investors Business Daily. All rights reserved.

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Price above $15 on Nasdaq, $20 on NYSE

Relative Strength Rating 80 or more

Accumulation/Distribution Rating A or B

Increase in number of funds owning the stock

Average daily volume of 300,000 or more

Market in confirmed uptrend

Breaking out of a sound base (cup, flat, etc.)

Volume above-average on breakout

More above avg. volume up weeks than down weeks

Within 5% of buy point

Add shares at pullback to 10-week moving avg. line

Special patterns: 3-weeks tight, etc.

Downward sloping handle in light volume

Relative Strength Line in new high ground

First- or second-stage base

Industry

Demand

Market Direction

Chart

Analysis

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Selling Checklist: Is it time to take your profits or cut your losses?

Sell a stock if it falls 7% - 8% below yourpurchase price

Sell most stocks when they climb 20% - 25% above their ideal buy point

Exception: Hold a stock for at least 8 weeks if it goes up 20% or more within three

weeks after its breakout. Then evaluate if it should be sold or held even longer.

Stocks often flash warning signs on their charts before they fall. Here are some to watch for:

Warning Signs & Sell Signals in a Chart


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Drop below 50-day moving average line on the heaviest daily volume in months

Heavy-volume sell off, particularly if the stock experiences the largest price drop of its run

Churning: heavy volume with little price progress

Climax Top: Signals stock is near its peak. Signs to look for: Occurs after long price run up of 18 weeks or more

25% to 50% price jump in three weeks or less

Largest one-day price gain of entire run

Daily volume may also be heaviest of its advance

Exhaustion gap: Opens significantly higher than prior day's close

Weekly price spread is largest since stock began its run


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Chart Patterns: Does the base youre reviewing meet these criteria?

Cup-with-Handle

Double Bottom


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Flat Base

Chart Patterns: Does the base youre reviewing meet these criteria?


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Base-on-Base


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Base Checklist: Does the stock youre reviewing make the grade?

Is the market in a confirmed uptrend?

Yes No

Can you identify the type of base (cup with handle, double bottom, etc.)?

How long is the base? Start count from first down week in the pattern.

____ At least 4 weeks for a square box base

____ At least 5 weeks for a flat base

____ At least 7 weeks for a cup, cup-with-handle or double-bottom

Does the base have elements of strength?


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Example: Gaps UP on volume in daily chart; relative strength line in new high territory; more

weeks of accumulation than distribution

Does the base have elements of support?

Example: Base on top of a base; price above 200-day moving average; closes near high of

weekly range

Has there been a shakeout (heavy-volume sell-off) near lows of the base?

If the base contains a handle area, is it within the upper of the entire

base? Does it drift down on lower than average volume?

At the ideal buy point, does the stock surge higher on volume at least 40% -

50% above average?


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Market Direction: Is now the time to be buying or selling?

Always trade in sync with the overall market.

Check the Market Pulse in The Big Picture column daily

to see if its time to buy or take defensive action.


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- Best time to buy stocks

- Only buy fundamentallystrong stocks breaking

out from sound buy points

- Proceed with caution

- Be ready to take defensiveaction if you see warning

signs in your stocks

- Dont buy stocks

- Lock in gains & cutshort any losses

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