Rules for homework and stock picking
1) look at the new high list
But a research point, not a buy list - potential buys under special circumstance when it pulls back you can find the entry point. it is a shopping list. Buy Only stocks that you are pretty sure will come back after going down. make sure its only the market, not a trouble in the company causing it to go down. Make sure fundamentals are the same. you will see good companies go down 3,5, 7, 8, 9 , 10 % off top. if whatever made it attractive goes away...nolonger a candidate to buy.
1st method. watch for stocks that have pulled back off the 'new high' list.
2) Watch the insider buying
If collosal insider buying and they buy at the high...BUY! Only buying at the high!! Bankable hubrus. Tells me they don't think there will be a pull back.
3)Check fundamentals, the story of the stock..be sure you like them as well as the others. Read through the conference call transcripts and quarterly files.
4) If people have a huge short position and there is huge insider buying...time to buy. Long buy low/sell high - shorts sell high and then buy low. it takes more conviction to short than long. short squeeze....stock price surge... This OFTEN leads to a short squeeze. its like the people who run the business say this is as low as its going!! we are buying now.. This leads oto a huge stock surge which I love! (need to look at how to find the short position in a stock.)
warning...balance of power has shifted to the shorts...dont' underestimate them... Be careful!