What to trade? A great way is to start with stocks! So you can trade more than 6000 companies at the New York Stock Exchange and the NASDAQ. But how to find stocks to buy?
The best way how to find stocks to buy is to use the Investor’s Business Weekly newspaper (IBD):
You can also buy a digital version at investors.com. IBD rates the stocks from 1 to 99 the so called Composite Rating. This based on the CANSLIM method created by Investor’s Business Daily founder William J. O’Neil. We recommend to read his bestselling book. You find a link in this blog. There are also some newer guides we like:
In the IBD newspaper you find a detailed list of the top IBD 50 stocks. All this stocks meets the CANSLIM criteria and have a good composite rating usually above 90. You see in the chart below the out performance versus the S&P 500. The average annual return of the S&P was 10% and the IBD 50 16.6%. The selection of tested fundamental criteria is the key. Of course you see that the drawdown of the IBD 50 list in market corrections was greater than the S&P 500. What goes well is what gives off the most. For this you need our Market Models.
If you have a subscription to the digital version of the IBD you can download the IBD 50 stock list. You can test it for a few bucks. We use the extended IBD 200 stock list for more candidates to buy.
In the next step, we use the LoroScanner to select stocks witch meets following criteria:
As you can see we are looking for stocks with a smooth uptrend (ROC / UI = Rate of Change / Ulcer Index) and above their stop. So we combine fundamental (IBD) with technical criteria.