3 Market TrendGuide for how to read the IBD paper (posted in our Files section on Meetup.com):Some possible strategies for distribution day counts:When any market index accumulates 3-5 distribution days over any 4-5 week period, begin reducing positionsWhen any market index accumulates 5-6 distribution days over any 4-5 week period, begin reducing positions aggressively and raise cash, especially if there are 4 distribution days within an 8 day periodMarket Pulse History:Market Pulse History < 3/23: LinkMarket Pulse History > 3/23: Link
4 Portfolio Rules Example of Portfolio Rules (need to have your own): In general, have a bias for staying in the market and holding your “low average cost” blocksMaintain a weekly overall portfolio advance/decline % trendIf the portfolio is drawn down by 7.5% from the prior week, sell all of a stock that is trading below the buy price. If the drawdown continues after that trim the least performing stocks first to reduce exposureIf three consecutive failures to the cut-loss-sell-point, then stop buying and figure out what is wrong - you are picking the wrong stocks or buying at the wrong timeTrack your ratio of winners to losers (those stocks that had to be sold at a loss). The ratio should be about 3 winners to 1 loser. If your ratio is not near this level you are either picking the wrong stocks or buying at the wrong timeAlways move incrementally in the market. Add exposure when you see: 1. a Follow Through Day; 2. Additional accumulation in the indices; 3. Successful breakouts; 4. Indices pushing through resistance; 5. Your initial positions show you a profit
5 Leading Stocks Demonstration of IBD Screen Center: Link IBD 50, International Leaders, Leading Sector StocksMy Routine (Daily)Select “Price & Volume” and sort by highest volumeIs there institutional buying/selling?What percentage of the stock list?Is high volume activity mostly driving prices up or down?Note movement of specific stocks and stock groups .. any relevance to portfolio holdings?Sort by Highest to Lowest percentage price changeWhat percent of the stock list is advancing versus declining?How big are the advances and the declines?Note movement of specific stocks and stock groupsSector RotationsWhen market is volatile watch for movement to “defense groups” such as utilities and long tenured established companies
6 Chart Patterns & Breakout Strategies References for Chart Patterns: BasesMeetup.com Site: IBD Lesson 3 PDF and PowerPoint: LinkMeetup.com Site: Base Chart Patterns Visuals (Eric’s PowerPoint):Breakout Buy StrategiesLevel of conviction in stock (market condition, stock ratings, industry group rank, chart pattern, base count, etc…)Position Size Scaling: 50% at BP, 35% at (BP+ 1.5%), 15% at (BP+2.5%)Position Size 100% at any point between BP and BP+5%If >5% wait for opportunity as many stocks return to their buy points after a breakoutReview specific stock examples for discussionSee our Files Section on Meetup.com
7 An Overall Grade for Stock Check-Up Method to get 1 consolidated grade from the multiple ratings in stock checkup:Do a Stock Checkup Grading for all Watch List Stocks:1Group RatingsComposite RatingRed Dots=0.5, Yellow Dots= 0.5EPS RatingRelative Strength RatingSMR RatingAcc/Dist Rating2General Market and Industry GroupGeneral MarketPortfolio Mgmt - N/AIndustry Group3Rate Fundamental and Technical PerformanceCurrent EarningsRed Dots=1, Yellow Dots= 0.5Annual EarningsSales, Margin, ROEPrice & VolumeSupply & DemandRed Dots=0.5, Yellow Dots= 04Grading System:APointsBPointsCPointsDPointsE> 10.00Thank-You Lee Tanner from Petaluma IBD Group!
8 Agenda – March 2014 Market Condition Scott O’Neil Webinar Tuesday 3/25 (1:20 – 24:00):Decision Factors in Volatile MarketsMarket TrendPortfolioLeading StocksChart Patterns & Breakout StrategiesOverall Grade for Stock CheckupQ&A: Specific Stock ReviewIBD National Meet-Up Monthly Series: FYI ONLY: LinkStock Contest: Target April Discussion: Anyone use Google Docs?