PDF Want to stay ahead

[Pages:28]Better Investing DELIVERED!

Want to stay ahead of the market?

Investor's Business Daily? knows how--we've been covering the stock market for over 30 years.

Subscribe to IBD? Digital + Weekly Print combo and you'll get: Winning stock lists for every type of investor Action plans written by market experts IBD Stock Checkup? tools with exclusive ratings And a Weekly Print Edition delivered to your home or office!

Try a FREE 4-week trial today! Go to: IBDCombo

Stock Guide // 2019 Q1

With a new year just beginning, it's a good time to review your investing process. In this edition of the MarketSmith? Stock Guide, we're starting 2019 by covering a smarter strategy you can use when buying stocks. If you're not pyramiding into your positions, you could be risking more than necessary if a trade goes against you. Check out our main article to find out how it works.

For our featured interview in December, we talked to bestselling author and investing champion Mark Minervini. In addition to winning the U.S. Investing Championship and being featured in the book Stock Market Wizards, Mark is a longtime MarketSmith subscriber who has used the platform for years to find new stocks. He shares some insights picked up during 30+ years of investing, including how to leave emotions out of investing and trade like a Wall Street veteran.

In the Coaches Corner, we interviewed Nikkolas Rosales, the newest member of the MarketSmith coaching team. Nikkolas is an active trader who watches the market from open to close, so he's got quite a few insights about investing. He also shared a custom screen he uses to find potential new buys in MarketSmith.

As always, if you have any questions or comments about your investing research or any MarketSmith features, please call one of our product coaches at (800) 831-2525 or email us at reachus@. We're here to help you make more money in the market.

Best Returns, The MarketSmith Team

 // 2019 Q1

S & P 500 INDEX CLOSE 2506.85

S&P 500 Index

2872.87

2801.90

2717.49

50 DAY MOVING AVERAGE

2532.69

2553.80

2594.62

2791.47 2691.99

2916.50

2940.91

2815.15

2800.18

200 DAY MOVING AVERAGE

2603.54

3050 2950 2850 2750 2650 2550 2450

2350

DAILY VOLUME AND 50-DAY AVERAGE DAILY VOLUME LINE

22 5

19 2

16 2

16

JAN 2018

FEB

MAR

30 13 APR

27 11 MAY

25 8 JUN

22 6 JUL

20 3

17

AUG

31 14 SEP

28 12 OCT

26 9 NOV

23 7 DEC

2250 2.5 B 1.4 B 850 M 500 M

21

NASDAQ COMPOSITE CLOSE 6635.28

NASDAQ Composite

8400

7505.77

7637.27 7319.58

50 DAY MOVING AVERAGE

6630.67

6805.96

7806.60

7933.31

8133.30

8107.38

7419.56

7604.24

7486.51

200 DAY MOVING AVERAGE

6922.83

6830.76

8200 8000 7800 7600 7400 7200 7000 6800 6600 6400

DAILY VOLUME AND 50-DAY AVERAGE DAILY VOLUME LINE

22 5

19 2

16 2

16

JAN 2018

FEB

MAR

30 13 APR

27 11 MAY

25 8 JUN

22 6 JUL

20 3

17

AUG

31 14 SEP

28 12 OCT

26 9 NOV

23 7 DEC

6200

4B 2.5 B 1.6 B 850 M 21

2

Table of Contents

Market Charts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 How to Build a Full Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

A Conversation with Mark Minervini . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 5-Month Trend Template* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Attunity Ltd (ATTU) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Acorn Intl Inc Ads (ATV). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 BioTelemetry Inc (BEAT) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Caredx Inc (CDNA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Coaches Corner: Nikkolas Rosales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 High Growth Potential* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Cyberark Software Ltd (CYBR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Fortinet Inc (FTNT) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Medpace Holdings Inc (MEDP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Medical Properties Trust (MPW) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Servicenow Inc (NOW). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Nexstar Media Group Cl A (NXST). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Features Highlight: The New Markup Tool. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Connect with Us . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

*All screen results are computer-generated and were run on December 31, 2018.

3

 // 2019 Q1

Feature Article: How to Build a Full Position

You found a great stock. It's on the verge of a proper buy point. All that's left to do is set an alert and buy your position, right? Not so fast. The truth is, any stock trade can go against you. You may have reams of research that point to one stock as the biggest thing since Amazon, but any stock can fail to break out or trigger a sell signal after hitting your buy point. That's where scaling into a position can help. This buying strategy is called pyramiding: building a full position in installments as a stock increases in price. This strategy was developed by the legendary investor Jesse Livermore as a way to reduce risk and increase cumulative returns. So how does it work? The concept behind pyramiding is called "averaging up," and it's a simple concept that is often overlooked because it seems counterintuitive. After all, why wait for a stock to become more expensive before buying more? The thing is, pyramiding is totally intuitive: you reward stocks that prove they can go higher by buying more. You're adding more on the way up instead of adding on the way down toward a sell signal. As William O'Neil wrote in How to Make Money in Stocks, "Why add more of your hardearned money to stocks that aren't working?" First, find the stock you want to buy. Wait for it to hit a proper buy point. Figure out what your full position size is for this stock; in this example, let's say our full position size is $10,000.

4

 // 2019 Q1

20% of target investment limit Only have full positions on those names that are proving themselves. 30% of target investment limit Only add to a position that is working. 50% of target investment limit Pull the trigger as close to the pivot point as possible. You've already done your research.

Step 1: Buy a 50% position (in this example, $5,000) as close to the buy point as possible, then wait. You want to make the stock prove itself by increasing in price. Step 2: When the stock goes up 2% to 2.5% from your initial purchase price, buy 30% of your allotted position size (in this example, $3,000). Now you're at 80% of your full position. Step 3: Finish building out your position by buying 20% of your full position (example: $2,000) when the stock rises an additional 2% to 2.5% from your initial purchase price.

Always calculate your initial position size by total monetary value, not by a set number of shares. Otherwise, your positions can vary wildly and put too much weight on a single position if its share price is much higher than others in your portfolio.

(continued)

5

 // 2019 Q1

(continued) How Pyramiding Minimizes Risk In this example, say the stock you bought dropped 8% and triggered your stop loss. If you bought a full position at the buy point, you would have lost $800 (8% of $10,000). By pyramiding into the position, your 50% initial position size would only lead to a $400 loss. This strategy can literally halve your losses on losing trades. To recap, pyramiding is a buying strategy where you build a full position in 3 installments: 50%, 30%, then the final 20%. If you buy as close to the buy point as possible, you've built a full position within 5% of the pivot, before the stock gets extended.

An Example of Pyramiding: OLLI broke out of a Flat base in August 2018. Here's a chart showing how one of the MarketSmith Coaches would scale into the position.

6

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download