How To Anticipate The Biggest Moves In Individual Stocks By Watching Leaders And Laggards
To
gain maximum profits from the markets, one of the most important
tasks a trader needs to do is watch and listen to what the market is doing on a
daily basis. What is the upside
leadership doing and what are the upside leading groups and sub-groups?
What is the downside leadership and what are the lagging groups and
sub-groups doing? By watching and
striving to gain understanding into what leading and lagging sub-groups are
doing each day, a trader gains invaluable information about the strength and
weakness of the market and about which stocks should be bought or sold short.
Each
day, traders should carefully study the following TradingMarkets.com charts: New
High RS Group Concentration, the New
High RS Sub-group Concentration, the New
Low RS Group Concentration, and the New
Low RS Sub-group Concentration. Pay
particular attention to the leading sub-groups that appear day after day on
these charts.Investors
shouldn’t forget that one of the criteria of our upfuel and downfuel is that the
stock is in a leading group or sub-group for longs and a lagging group or
sub-group for shorts. Keep a constantly
updated list of the top five groups and subgroups that appear on these lists on
a daily basis, and on a day-after-day basis for the last several weeks.
When
a stock breaks out to the upside and meets all of our other upfuel criteria —
make sure it is in a group and sub-group that also are among the leaders of the
last few weeks. Get out your Investor’s
Business Daily and go to the “Industry Groups” page (usually
around page A25 and just following the critical “General Market &
Sectors” page).
You want a stock that is among the top 10 in both the daily Group and
Sub-group concentration list and your list for the last two-three weeks and is
either also in a group in the top forty on the IBD industry group ranking table,
or has been moving up to very close to being in the top 40 from a very low level
over the last two weeks and has been emboldened for several of the last seven
trading days. This will force you to
focus only on leading sub-groups and groups for your longs.
When
a stock breaks down to the downside and meets all of our other downfuel criteria
— make sure it is in a group and sub-group that also are among the laggards
(worst performers) of the last few weeks. Get
out your Investor’s Business Daily and go to the “Industry
Groups” page (usually around page A25 and just following the critical
“General Market & Sectors” page). Verify
for sure that the stock in question is in a group that is in the bottom forty in
the daily industry group ranking table. You
want a stock that is among the top 10 in both the daily Group and Sub-group
concentration new low list and your list for the last two-three weeks and is
either also in a group in the bottom 40 on the IBD industry group ranking table,
or has been moving down to very close to being in the bottom 40 from a very low
level over the last two weeks. This will force you to focus only on the weakest
sub-groups and groups for your shorts.
An
even greater edge can be obtained if you subscribe to some sort of service like
WONDA or AIQ, where you can actually chart the Industry Groups (or a surrogate
of them). When you find an Industry
Group that meets the above criteria and also has broken out of its own chart
consolidation to the upside or downside, then you really know you’ve got a very
good likelihood of a profitable situation — and you’ll want to get a good
representative of this group including in your portfolio.
The
more you pay attention to what the leadership and laggards are doing on an
individual stock and a group/sub-group basis daily,
the better able you will be to exploit and anticipate the biggest moves in
individual stocks and groups. So after
you’ve begun to master finding stocks that break out properly with upfuel and
downfuel, focus on leadership laggardship to improve your trading that much
more.
Here To Learn How Mark Boucher Has Been Successful For The Past Decade