Stock Guide

[Pages:32]Stock Guide

2021 Q3

The Keys to Improving Performance

Feature Article: Keys to Improving

Performance

Interview: Jason Thomson

Good Trade/ Bad Trade

Don't miss this weekly video.

The market never stops, and neither does MarketSmith?

Stay up-to-date on current market trends with our TAKE ON THE MARKET webinar series. Every Friday, our senior product coaches deliver insights, tips and guidance for investors looking for an edge. Alongside the timely market analysis, you'll find evergreen strategies for improving your returns and outperforming the market.

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Stock Guide // 2021 Q3

There's a classic William O'Neil quote around MarketSmith headquarters that the coaches like to repeat often: "All stocks are bad... unless they go up." It's a reminder that trading stocks is a results-based business, and your performance is always judged by your bottom line.

In this issue of the MarketSmith quarterly Stock Guide, we collected some evergreen tips from the coaches on how to improve performance when it comes to buying and selling stocks. For our feature article, we focus on four key tenets of sustained outperformance: stock selection, market timing, concentration and money management. Whether you've been trading for decades or you're brand new to investing, this article is full of strategies and insights that you can incorporate to help improve your performance.

For this issue's Q&A, we spoke with Jason Thomson, a Portfolio Manager at O'Neil Global Advisors. As an institutional money manager, Jason has a particular lens on the market

and investing that serves as a helpful look at how a professional trades. He shared his thoughts about the current market and what he did to improve his performance over the years.

In the latest edition of Good Trade / Bad Trade, MarketSmith Coach Gerry Volkersz opened the books on a couple of his recent trades. Gerry nailed a red-hot IPO play that nearly doubled throughout its run in the Spring of 2021. On the flipside, he got shaken out of a surging apparel retailer right before a breakout and got a lesson in proper stop-loss placement.

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

2021 Q3 Stock Guide 3

Market Chart Nasdaq Composite 4 2021 Q3 Stock Guide

Nasdaq Composite

Table of Contents

Market Chart.................................................................... 4

THE KEYS TO

Improving Performance

page 6

Feature Article: The Keys to Improving Performance................................................ 6 Stock Screen: Top-Rated in Top Groups*............................................. 12

360 Digitech Inc Cl AAds (QFIN).......................... 13 Academy Sports & Outdoor (ASO)...................... 14 Harborone Bancorp Inc (HONE).......................... 15

Q&A: Jason Thomson.................................................... 16

Good Trade/Bad Trade: Gerry Volkersz..................... 18 Stock Screen: Up on Price and Volume*.............................................. 24

Pool Corp (POOL)................................................... 25 R H (RH).................................................................... 26 Ternium Sa Adr (TX)............................................... 27

Features Highlight: New "All Tight Areas" Stock List and Redesigned Tablet App ....................................... 28

*All screen results are computer-generated and were run on July 7, 2021.

CONNECT WITH US 2021 Q3 Stock Guide 5

THE KEYS TO

Improving Performance

Professional athletes rely on their coaches to help them improve their performance, whether it be on the field, the track or the court. In a similar spirit, MarketSmith has Product Coaches to help our members get the most out of their subscriptions and improve their overall performance using the

wide array of features, tools and educational resources available. For this issue, we asked the MarketSmith Coaches to highlight four keys to improving your process and putting the odds in your favor on every trade.

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The Keys to Improving Performance Feature Article

1. Stock Selection

Good Fundamentals Drive Stock Prices Up A stock's long-term price action is driven by the fundamentals, especially the earnings. You could see short-term price swings that have nothing to do with fundamentals, but ultimately these are the big catalysts behind a sustained move. When you pull up a chart in MarketSmith, the first thing to check is the fundamentals to see if it's even worth considering.

Or, to put it simply, fundamentals tell you which stocks to buy, while the chart tells you when to buy it.

Use IBD?'s Ratings to Narrow Your Focus One of the biggest time-saving features in MarketSmith is the IBD proprietary ratings that do the fundamental analysis for you. There are over 5,000 stocks in the MarketSmith database, so you can use these ratings to help get that number down to a manageable level for you to concentrate on.

Four of the IBD ratings that our product coaches pay special attention to are the

EPS Rating, the RS Rating, the Group RS Rating and the Composite Rating.

Always Check the Institutional Sponsorship Big institutions like hedge funds, mutual funds and pension funds are responsible for a vast majority of all the trades in the stock market. They, more than any other factor, can drive prices up or down with their buying and selling. But you, as an individual investor, have a key advantage: You can follow which stocks the funds are buying, holding and selling and act accordingly.

To the right of any chart in MarketSmith, click on the Related Information panel tab to slide it open. Click on "Ownership & Funds" to bring up information about which institutions own this stock. Look for:

? Increasing fund ownership in

recent quarters

? Ownership by one or more

members of the IBD Mutual Fund Index

? Lots of A-rated funds in the full

list when you click "Show Fund Ownership"

COACHES' TIP: Think of these elements of stock selection like a checklist. Even great stocks won't always have every single trait going for it--but you always want to see as many as possible.

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Feature Article The Keys to Improving Performance

2. Market Timing

Pay Attention to the Current Market Trend No matter how good your stock selection is, the overall market conditions will either help propel the stock higher or drag it down. You can be right about a stock in the long term, but if you buy it at a bad time, you could be staring down considerable losses that take a long time to recover.

Instead, you want to trade in sync with the market, since three out of every four stocks will move up or down with the overall market.

At MarketSmith, we don't use vague terms like "bull market" and "bear market" when we're talking about timing the market. We use three general market trends based on decades of research into past market cycles.

You can find the current market outlook on the MarketSmith homepage under "Market Snapshot."

Get Aggressive in Uptrends By far, the biggest money is made in stocks during confirmed uptrends. This is the best time to buy fundamentally strong growth stocks breaking out of base patterns on high volume. Put your money to work and monitor key MarketSmith lists like Near Pivot and Breaking Out Today to scout for your next buy. Both of these lists can be found by pressing the bright orange "Open Stock Ideas" button above the MarketSmith chart interface.

Exercise Caution When an Uptrend is Under Pressure When the market is downgraded to Uptrend Under Pressure, think of it as a caution flag to slow down and reassess your portfolio since the uptrend could be running out of steam. Consider cutting your worst-performing stocks and be careful about making news buys, since this is often an intermediate step before a market correction.

Protect Yourself in Corrections-- But Don't Disengage When the current outlook says Market in Correction, that's a big flashing red light. Many MarketSmith members will go 100% in cash to avoid significant losses or reduce their overall exposure to just a few long-term holdings in which they already have large

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